The lithium market is experiencing a serious value decline on account of rising provide and weaker demand. In February 2025, the lithium carbonate CIF North Asia value fell under $10,000 per metric ton, dropping 4.5% to $9,550/t. That is the bottom degree since February 2021. Analysts anticipate additional cuts in manufacturing all through 2025 to stability the market.
The value drop is principally on account of robust manufacturing in Chile and a post-holiday demand slowdown in China. Additionally, new lithium initiatives in Mali and Argentina increase world provide. This provides to the downward strain on costs.
Why Are Lithium Costs Falling?
A number of key components contribute to the continuing decline in lithium pricesstarting from oversupply to shifting market dynamics and coverage adjustments.
Oversupply Floods the Market
Lithium manufacturing has been rising quickly. In January 2025, Chile’s lithium exports elevated by 22.8% month over month, flooding the market with further provide.
Mali’s new lithium mines, Bougouni and Goulamina, will increase lithium output to 40,528 metric tons of lithium carbonate equal (LCE) in 2025. This accounts for two.7% of the worldwide provide.
Moreover, Argentina’s Ganfeng Lithium Group has began manufacturing on the Mariana brine mission, including one other 17,420 metric tons of LCE yearly. Argentina is now the highest producer within the Lithium Triangle. This space consists of Bolivia and Chile, which maintain among the richest lithium reserves on the planet.
Benchmark Mineral Intelligence exhibits that the worldwide weighted common value for lithium is dropping, as seen within the chart. This variation displays the rise in provide.
China’s Demand Woes
China, the world’s largest purchaser of lithium, noticed a pointy decline in demand in early 2025. The Lunar New Yr holidays slowed down industrial work. Many battery makers additionally postponed their purchases. This contributed to a 1.6% value drop for lithium carbonate in Chinabringing it all the way down to 76,100 yuan per metric ton by mid-February.
Moreover, the shift to lithium iron phosphate (LFP) batteries—which require much less lithium than conventional nickel-based batteries—is lowering lithium demand. Firms comparable to Tianqi Lithium and IOO Ltd. have already halted growth at their lithium hydroxide refineries on account of weaker market situations.
Benchmark Mineral Intelligence stated lithium costs soared to $81,375 per tonne in China by December 2022. This spike pushed shoppers to search for alternate options, comparable to LFP batteries.
Coverage Uncertainty within the U.S.
The way forward for North America’s lithium provide chain is unclear, including to the market strain. The US Inflation Discount Act (IRA) of 2022 gave tax credit for lithium from Canada and different allied international locations.
Now, it’s being reconsidered. The Trump administration additionally instructed a ten% tariff on power exports from Canada, like lithium. If enacted, these tariffs may make lithium imports dearer, limiting funding within the sector.
At present, solely 44.7% of US lithium demand is met by home manufacturingrising to 76.4% when together with Canadian provide. Any coverage adjustments may considerably impression lithium costs and availability in North America.
Cheaper Lithium Sparks a New EV Value Struggle
The decline in lithium costs has had a notable impression on battery manufacturing prices. The falling costs are carefully linked to developments within the plug-in electrical car (PEV) and battery electrical car (BEV) markets.
Slower-than-expected EV adoption in key areas, pushed by lowered authorities incentives and financial uncertainty, has weakened lithium demand. Automakers are adjusting manufacturing forecasts, resulting in fluctuations in battery materials purchases.
Benchmark Mineral Intelligence studies that cell costs have dropped 73% since 2014. This decline comes from larger manufacturing volumes, new expertise, and decrease uncooked materials prices. These components let battery makers minimize costs.
Nonetheless, lower prices have made EVs cheaper. This might improve demand over time as forecasted under. But, the present oversupply of lithium makes it exhausting for producers to remain worthwhile.
How the Trade Is Reacting to the Lithium Stoop
The extended decline in lithium costs has led to vital trade reactions. The trade is responding to the continuing stoop with varied methods aimed toward stabilizing the market. Huge producers like Albemarle and SQM plan to chop again manufacturing. This transfer goals to cease additional value drops.
Some mining corporations are delaying new initiatives, whereas others are chopping prices to stay worthwhile within the face of decrease revenues. Smaller lithium miners are having a troublesome time. These with out robust monetary assist are struggling essentially the most. Some have needed to cease operations or search for mergers to outlive.
In December 2024, Rio Tinto acquired Arcadium Lithium for €6.2 billionconsolidating its place within the world lithium market. This acquisition occurred amid an extra provide and considerably decrease costs since their peak in 2022.
Regardless of these challenges, main mining corporations anticipate lithium demand to rise within the subsequent decade. This development will probably be fueled by the shift towards electrical transportation and renewable power storage.
Nonetheless, the oversupply is inflicting issues for smaller corporations. Some have reduce or stopped their operations. Chopping subsidies in key international locations has slowed EV gross sales development. Which means that solely a manufacturing minimize might increase lithium costs within the medium time period.
Wanting Forward – When Will Lithium Costs Get better?
Regardless of the present challenges, there’s optimism about the way forward for the lithium market. Trade analysts foresee a future improve in lithium demand, probably resulting in a market shift by the early 2030s, pushed by infrastructure initiatives and the expansion of inexperienced expertise. Notable investments embody Exxon Mobil and Teslain search of to capitalize on future lithium wants.
Goldman Sachs Analysis estimates the general improve in data center power consumption from AI to be 200 terawatt-hours per 12 months between 2023 and 2030. As AI use and high-performance computing develop, the necessity for lithium-ion batteries will rise. These batteries are key for backup energy in large computing amenities.
Notably, S&P International Commodity Insights predicts that the oversupply will make it exhausting for lithium costs to go up till the following decade.
The lithium market is going through oversupply and falling costs. This is because of larger world manufacturing, lowered demand from key markets like China, and uncertainties in main economies.
Whereas these components current challenges within the brief time period, the anticipated development in electrical car adoption and renewable energy storage options affords a optimistic outlook for lithium demand in the long term. Trade stakeholders should navigate these complexities fastidiously, balancing present market realities with future alternatives.
