Lithium prices are expected to stabilize in 2025 following two years of steep declines, as mine closures and robust electric vehicle (EV) sales in China absorb an oversupply of the metal. However, the potential for mines to reopen could limit significant price increases, according to analysts and traders.
Over the past two years, lithium prices have fallen nearly 86% from their peak in November 2022, leading many companies to shutter mines globally.
Despite this, market participants believe that these closures will result in strong demand outpacing supply in 2025, as China increases policy support to boost sales in the world’s largest EV market.
Antaike, China’s state-owned commodity data provider, predicts the global lithium supply glut will shrink by half in 2025, dropping from nearly 150,000 tons in 2024 to around 80,000 tons of lithium carbonate equivalent (LCE).
“We expect lithium prices to recover in 2025, as the production cuts seen in 2024, and the potential for more curtailments, will significantly reduce the market surplus,” said Cameron Hughes, battery markets analyst at CRU Group. Hughes referred to mine closures without providing further details.
China’s EV subsidies, which were doubled in July, have contributed to the price rally in late 2024. By mid-December, over 5 million vehicles had been sold under these incentives. Analysts agree that these policies will continue to support lithium prices into 2025.
“The uptick in lithium trade business in the fourth quarter of 2024 can be undeniably attributed to the policy of providing subsidies,” said a buyer at a mid-sized cathode material plant in China, who requested anonymity due to company restrictions on speaking to the media.
Price improvements are expected to materialize towards the end of 2025, as inventories are depleted and buyers return to the spot market, according to David Merriman, research director at metals research firm Project Blue.
Merriman forecasts that lithium prices will stabilize at an average of $11,092 per metric ton in 2025, while Chinese broker Guotai Juan estimates a price range between 60,000 yuan ($8,184) and 90,000 yuan ($12,276).
Last year, the most-traded lithium contract on the Guangzhou Futures Exchange fluctuated between 68,250 yuan and 125,000 yuan per ton.
However, analysts caution that any significant price surge in 2025 may be limited, as production can be ramped up quickly at many closed mines if it becomes profitable.
Merriman also noted that potential US policy changes under the incoming Biden administration, such as new tariffs on EV battery imports from China or reductions in domestic EV incentives, could pose risks to lithium demand.
