Key information
- Lithium prices are expected to stabilize in 2025 after a significant decline.
- Strong sales of electric vehicles in China and government policies will drive demand, which will outstrip supply.
- The global lithium supply glut is expected to be cut in half, helping to stabilize prices.
Market reports indicate that lithium prices are expected to stabilize in 2025 after experiencing significant declines over the past two years. This drop, attributed to an oversupply of lithium, has caused prices to fall more than 80 percent since peaking in November 2022.
The sharp drop in prices has led many companies to temporarily halt their extraction activities. However, this situation is expected to change, with demand outstripping supply in the coming year. Strong electric vehicle (EV) sales in China are a key driver of this shift, bolstered by intensifying government policies aimed at supporting the EV market – the world’s largest.
Market expectations and projections
China’s state-owned raw materials data provider Antaike forecasts the global lithium supply glut will be cut in half, to around 80,000 tonnes of lithium carbonate equivalent (LCE), from nearly 150,000 tons last year. The country’s decision to double subsidies for electric vehicles in July boosted sales, with more than five million vehicles benefiting from the incentives as of mid-December. This increase should contribute to the stabilization of lithium prices in 2025.
Risks and uncertainties
Despite this positive outlook, analysts warn that any substantial price increases this year could be limited, as production from previously closed mines can be quickly restarted if market conditions become profitable. Additionally, potential changes to U.S. trade policy under the new administration, such as tariffs on EV battery imports from China or reduced domestic EV incentives, pose significant risks to the demand for lithium.
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