In 2024, the global lithium market continues to face downward pressure. However, the rate of this decline has significantly narrowed compared to previous years. Looking ahead to 2025, while the oversupply situation will persist, the ongoing trend of supply-demand rebalancing is expected to result in the gradual exit of high-cost lithium producers from the market. This could pave the way for a modest recovery in lithium prices next year.
Long story short, the “winter” in the lithium market may soon be over.
Lithium production capacity continues to grow, providing a solid foundation for global supply. According to the latest reports, global lithium production is expected to rise by 16% in 2025, reaching 1.58 million tons of lithium carbonate equivalent (LCE), up from an estimated 1.36 million tons in 2024.
However, significant adjustments are under way, particularly in China’s lithium sector. Since the peak in June 2024, China’s lepidolite production has been halved, and the downward pressure is expected to persist into 2025. For instance, CATL (Contemporary Amperex Technology Co., Ltd.) has decided to suspend its lepidolite mining operations in Jiangxi province. Analysts at UBS suggest that this suspension will reduce China’s monthly lithium carbonate production by approximately 8%, helping to ease the oversupply issue and driving a potential price rebound.
Additionally, some mining projects in Africa, such as those in Zimbabwe and Nigeria, face mounting challenges. Weak infrastructure, inefficiencies, and high transportation costs make it difficult for these projects to remain profitable in a low-lithium-price environment, with several operations expected to pause. In Australia, Greenbushes remains the only lithium mine operating with positive cash flow. Other projects, such as Bald Hill and Ngungaju plants, have been suspended, and new developments are delayed.
On the demand side, significant growth is forecast. Adamas Intelligence, a battery metals and electric vehicle consultancy in Toronto, predicts global lithium demand will grow 26% year-over-year in 2025, reaching 1.46 million tons of LCE, up from an estimated 1.15 million tons in 2024.
The largest contributor to lithium demand comes from electric vehicles (EVs). Currently, over 80% of global lithium production is utilized by battery manufacturers, and this figure is expected to rise to 95% by 2030. While the European EV market has cooled somewhat, worldwide EV sales are projected to reach 19.2 million vehicles in 2025, with China alone accounting for more than 15 million of those. This growing demand is expected to provide strong support for the lithium market.
Looking further ahead, the outlook appears even more promising. According to a recent McKinsey report, annual global EV sales are expected to reach 28 million by 2030. However, this rapid growth will likely lead to supply-demand imbalances for critical battery materials such as lithium.
Another potential driver of lithium demand is the energy storage market. Grid-scale energy storage systems are expected to generate increasing demand for lithium, with lithium used for storage projected to account for 13% of global demand by 2025, representing a 45% year-over-year growth. In 2024, global demand for lithium-ion batteries in energy storage is expected to reach 256.41 GWh, and this will rise to 355.22 GWh in 2025 and 463.23 GWh in 2026.
Lithium carbonate inventories began to climb at the end of 2023. However, starting from the third quarter of 2024, as demand recovers and production cuts take effect, inventories have started to gradually decline.
In summary, despite challenges such as oversupply and price pressures, the lithium market is poised for recovery by 2025, driven by supply adjustments, the gradual exit of unprofitable producers, and increasing demand from electric vehicles and energy storage systems. These trends suggest that the cold days of the lithium market may finally be coming to an end.
