Lithium Prices Expected to Stabilize in 2025 Amid Supply Adjustments and EV Demand
Lithium prices are forecasted to stabilize in 2025 after two years of sharp declines driven by a global oversupply. A nearly 86% drop in prices since their peak in November 2022 forced the closure of numerous mines worldwide. However, analysts and traders anticipate that strong electric vehicle (EV) sales in China and reductions in lithium supply will help balance the market this year, though reopened mines could limit potential price gains.
According to Antaike, China's state-owned commodity data provider, the global lithium supply surplus is expected to shrink by nearly half, from 150,000 tons of lithium carbonate equivalent (LCE) in 2024 to approximately 80,000 tons in 2025. This reduction reflects curtailments in lithium production and the likelihood of additional mine closures. “We expect to see a price recovery for lithium in 2025 as the curtailments seen in 2024, and the possibility of further curtailments, will significantly reduce the market surplus,” said Cameron Hughes, a battery markets analyst at CRU Group.
China’s robust EV market continues to play a pivotal role in supporting lithium demand. The country’s government doubled EV subsidies in July 2024, which benefited more than 5 million cars sold by mid-December. These subsidies helped drive a late-year price rally for lithium and are expected to continue supporting prices into 2025, according to analysts and traders. A buyer at a mid-sized cathode material plant in China attributed a surge in lithium trade activity during the fourth quarter of 2024 to these government incentives.
David Merriman, research director at metals research firm Project Blue, predicts that any price recovery will likely materialize towards the end of 2025 as inventories are drawn down and buyers return to the spot market. Project Blue forecasts an average lithium price of $11,092 per metric ton for 2025, while Guotai Juan, a Chinese brokerage, estimates a price range of 60,000 yuan ($8,184) to 90,000 yuan ($12,276) per metric ton.
Last year, the most-traded lithium contract on the Guangzhou Futures Exchange fluctuated between 68,250 yuan and 125,000 yuan per metric ton. Despite signs of recovery, analysts caution that significant price increases could be constrained by the ability of closed mines to rapidly restart production if conditions become profitable.
Potential policy changes in the United States under the incoming Trump administration may also affect lithium demand. Proposed measures, such as new tariffs on EV battery imports from China or reductions in domestic EV incentives, could create additional market uncertainty, according to Merriman.
