Lithium prices to stabilize in 2025 as mines close, electric vehicle sales in China ease glut, Reuters analysts say
SHANGHAI (Reuters) – Lithium prices are expected to stabilize in 2025 after two years of steep declines as closed mines and strong sales of electric vehicles in China absorb excess supply, although the potential for mine reopenings could limit gains, analysts and traders said.
A nearly 86% drop in electric vehicle battery metal prices over the past two years from a peak in November 2022 has companies working in mothballed mines around the world. But market participants say the closures mean strong demand should outpace supply this year as China intensifies policy support to boost sales in the world’s biggest EV market.
Global lithium supply is forecast to halve to around 80,000 tonnes of lithium carbonate equivalent (LCE) from nearly 150,000 last year, according to Antaike, China’s state-run commodity data provider.
“We expect lithium prices to recover in 2025 as the restrictions seen in 2024 and the possibility of further restrictions will significantly reduce the market glut,” said Cameron Hughes, battery market analyst at CRU Group, referring to the mine closure without providing further details.
China doubled subsidies for electric vehicles in July and more than 5 million cars sold through mid-December benefited from the incentives.
China’s electric vehicle subsidies helped boost lithium prices late last year and should continue to support prices in 2025, three analysts and two traders said.
“The increase in lithium trading business in the fourth quarter of 2024 is undeniably attributable to the subsidy policy,” said a buyer at a medium-sized cathode material factory in China, speaking on condition of anonymity because the buyer was not authorized to speak to the media.
Any improvement in prices is likely to be felt in late 2025 as inventories run out and buyers return to the spot market, said David Merriman, director of research at metals research firm Project Blue.
Project Blue expects prices to stabilize around an average of $11,092 per metric ton in 2025. Guotai Juan, a Chinese broker, forecasts a price range of 60,000 yuan ($8,184) to 90,000 yuan ($12,276).
The most-traded lithium contract on the Guangzhou Futures Exchange traded between 68,250 yuan and 125,000 yuan a tonne last year.
Analysts, however, cautioned that any significant price gains this year are likely to be limited as production can be ramped up quickly at many closed mines if it proves profitable.
Merriman said potential U.S. policy changes under the incoming Trump administration, including new tariffs on electric vehicle battery imports from China or reductions in domestic incentives for electric vehicles, could also pose risks to lithium demand.
(1 USD = 7.3312 )
