Lithium prices unlikely to recover in 2025

Spanish Market: Battery materials, Metals
13/01/25

Prices for lithium carbonate equivalent (LCE) are unlikely to recover this year, according to market participants, owing to high inventories and Chinese overcapacity.

While the vast majority of firms have either suspended or trimmed production at costs above Argus-assessed prices (see graph), a number of other factors have weighed on price rises, including redundant Chinese lithium refining capacity, inventories of low and mid-grade concentrate and end-of-life LFP batteries.

Chinese lepidolite, African low-grade ores and Brazilian tailings are "not immune" to low prices, according to supply chain consultantcy SC Insights. Prices are currently far below highs of $80,000/t in late 2022, although not at record lows by historical standards.

"We have put our lithium plant in Zimbabwe on ice for now, margins are just too tight," a southern Africa-based producer said.

The market could start to recover in the second half of 2026 as carmakers turn increasingly towards lower-cost lithium iron phosphate (LFP) batteries, SC Insights said.

Between 2025 and 2026, major carmakers will start "socialising the intensions of using more LFP and LFMP [lithium iron manganese phosphate]", with it especially vital that LFMP producers "react early and offer a cost-competitive solution in CAM/LIB [cathode active material/lithium-ion battery] spaces".

SC Insights forecasts that global annual LCE production will tip over 2.5mn t of LCE by 2030 (see graph), from just over 1mn t last year, based on the adoption of these newer battery chemistries. Buildout of this supply will depend, SC Insights said, on the proposed restriction of CAM/LIB technology by China.

The buildout of Argentinian lithium production could be a key factor in 2025, according to SC Insights, after global mining giant Rio Tinto announced last October that it would buy Arcadium Lithium. Argentinian president Javier Milei and Rio Tinto held a meeting in December 2024 and although it is unclear what the results of that meeting were, the relationship between Rio Tinto and the Argentinian government could be important for the lithium market this year.

Argentina holds the third-largest reserves of lithium at 3.6mn t behind Chile and Australia, and the second-largest pool of resources at 23mn t, behind Bolivia, according to the US Geological Survey in January.

By Chris Welch

Cost of production, lithium carbonate equivalent (LCE)

Lithium carbonate equivalent (LCE) production t

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