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Lithium Prices Surge on China Supply Fears
25 Nov
Summary
- Lithium prices are projected to increase due to Chinese supply restrictions.
- Robust demand for electric vehicles is a key driver of rising lithium costs.
- Analysts predict a significant rise in lithium carbonate and hydroxide prices by 2025.
Lithium prices are expected to climb as China's supply curbs and robust demand, particularly from electric vehicles (EVs), alleviate a market oversupply. Research agency BMI has revised its 2025 price forecasts upward for both Chinese lithium carbonate and lithium hydroxide. This trend is supported by data showing significant price increases in the past quarter for spodumene concentrate and lithium hydroxide.
The current price rally is linked to tightened enforcement of China's Mineral Resources Law, leading to production halts at key mining projects. Further market volatility was triggered by China's initial announcement of export controls on lithium-ion battery supply chains, though these were later suspended for a year. Chilean miner SQM has also reported strong prices and raised its global lithium demand growth forecast.
Despite the current bullish phase, some analysts suggest prices might edge lower as Chinese projects are anticipated to increase supply before year-end. However, the accelerating adoption of EVs and strong battery energy storage system deployment are expected to underpin demand growth, potentially absorbing oversupply only by the early 2030s.
