The price of lithium will stabilize in 2025, after two years of steep decline due to the closure of mines of the metal while strong sales electric vehicles u Kini consumes supplies of lithium.
At the same time, the potential for mine reopening could limit gains, analysts and traders said.
The nearly 86 percent fall in lithium prices over the past two years from its peak in November 2022 has forced companies around the world to put mines "on ice," Reuters reports.
Market participants say the closures mean strong demand is expected to outpace supply this year as China steps up policy support to boost sales in the world's biggest electric vehicle market.
Global lithium stockpiles will nearly halve to 80.000 tonnes of lithium carbonate equivalent (LCE) from last year's 150.000 tonnes, according to forecasts from China's state-run data agency Antaika, China's state-run commodity data provider.
"We expect to see a recovery in lithium prices in 2025, as cuts in 2024 and the possibility of further inventory cuts will significantly reduce the market glut," said Cameron Hughes, battery market analyst at CRU Group, referring to the mine closures.
However, he did not provide more details.
China's Electric Vehicle Subsidies and Lithium Prices
Chinese subsidies for electric vehicles helped boost lithium prices late last year and should continue to support prices in 2025, three analysts and two traders said, according to Reuters.
"The increase in lithium trading business in the fourth quarter of 2024 is undeniably attributable to the subsidy policy," said an unnamed buyer at a medium-sized cathode material factory in China.
Any improvement in prices is likely to be felt in late 2025 as inventories run out and buyers return to the market, said David Merriman, director of research at metals research firm Project Blue.
The company expects prices to stabilize around an average of $11.092 per ton in 2025.
Guotai Yuan, a Chinese broker, forecasts a price range of 60.000 yuan ($8.184) to 90.000 yuan ($12.276) per tonne.
Analysts, however, cautioned that any significant price increase this year is likely to be limited as production can be ramped up quickly at many closed mines if they prove profitable.
Merriman said potential U.S. policy changes under the incoming Trump administration, including new tariffs on electric vehicle battery imports from China or a reduction in domestic incentives for electric vehicles, could also pose risks to lithium demand.
Source: Reuters
