Stubbornly Resilient Lithium Supply Continues to Challenge Recovery
Lithium prices remain under pressure due to oversupply and uncertain demand, complicating recovery efforts in the market
Lithium, Electric Vehicles, China, Australia, Zimbabwe, Argentina
Bloomberg: The lithium market is still feeling the pinch from a surplus. Prices have dropped since late 2022, and it doesn’t look like they’ll bounce back anytime soon. Analysts expect a smaller surplus this year, but it’s still there.
Even though some mines might restart if prices go up, most experts think the demand for lithium will rise in the long run. But with geopolitical tensions and potential tariffs, miners are hesitant to cut back on production.
Federico Gay from Benchmark Mineral Intelligence mentioned that this could keep prices from rising too much in 2025. They predict North Asian lithium carbonate prices will stay around $10,400 a ton this year.
Some lithium producers are struggling with lower margins and have paused output or delayed expansions. While this helped stabilize prices a bit, it wasn’t enough to spark a real recovery. There’s worry that if prices rise, mining could ramp up quickly, especially in Africa and China.
Thomas Matthews from CRU Group noted that some operations could restart in just a month. The balance of the market will depend on whether these operations ramp up or if more supply gets cut back.
New supply is also expected this year, with countries like Zimbabwe, China, and Argentina increasing output. Meanwhile, Mali and Brazil are set to grow their capacity significantly.
Bank of America pointed out that new supply keeps coming in, while higher-cost operators aren’t shutting down enough. This is partly due to strategy and geopolitics, as producers don’t want to cut back in a growing market.
On the demand side, the outlook for EV sales, especially in the US, looks shaky. BloombergNEF has downgraded its forecast for EVs to make up just a third of new passenger car sales by the end of the decade.
Alice Yu from S&P Global noted that global automakers are at a crossroads, deciding whether to push forward with electrification or slow down the transition.
With the potential for a trade war between the US and China, lithium prices could see more volatility. Beijing is considering adding technologies related to lithium refining to its export control list.
Matthews from CRU mentioned that uncertainties remain, especially with tariffs and export controls being widely discussed. Changes in subsidies and emissions standards could also negatively impact the market.
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