Lithium, an essential mineral for the manufacture of batteries, could return to an upward trajectory in 2025 according to some analysts. After two years of sharp decline, the balance between supply and demand seems to be restoring, also paving the way for the reopening of many mines.
Over the past two years, the price of lithium has fallen dramatically, recording an 86% drop since its peak in November 2022. This situation is explained by an excess supply compared to a temporarily curbed demand, leading to the closure of many operations mining.
A growing market
Despite this correction, demand for lithium is experiencing sustained growth, driven in particular by the electric vehicle market in China. The Middle Kingdom continues to amplify its political support for this sector, for example doubling its subsidies by mid-2024. According to some experts, the recovery of lithium trade in the fourth quarter of 2024 is directly linked to these incentive policies.
However, analysts agree on one point: any significant increase in the price of lithium could be limited by the rapid reopening of mines. In the event of a shortage, it would be relatively simple to restart production to meet demand.
The lithium market is not without risks. The Trump administration could introduce new tariffs on electric vehicle batteries imported from China, which could dampen demand. Likewise, the reduction of certain support policies for the acquisition of EVs could slow demand for 2025, thus affecting lithium consumption.
Certain companies such as mining companies (Eramet, Albemarle, Ganfeng, etc.) or even battery producers (CATL, Samsung, BYD) to clearly see the price directly impacted by the price of lithium.
