Why Lithium prices may finally stabilise in 2025 after a two-year downtrend

Shuttered mines and rising sales of electric vehicles in China are expected to keep lithium prices stable in 2025, according to a Reuters report. 

Lithium prices have experienced two straight years of declines. Analysts and traders expect strong fundamentals in 2025 could keep prices relatively steady. 

However, they said that the potential for mines to reopen this year could cap gains in lithium prices, according to the report. 

Several lithium mines across the world had to shut down operations due to a sharp decline in the prices of the metal over the past couple of years.

Lithium prices have fallen 86% over the last two years from its peak of November 2022. 

The market believes that these shutdowns could mean buoyant demand for the metal this year, which could outstrip supply.

China is expected to bring out more favourable policies to boost sales of electric vehicles in the country. 

Lithium oversupply shrinking

The global lithium oversupply is likely to fall to around 80,000 tons this year, which is equivalent to lithium carbonate from nearly 150,000 in 2024, according to Antaike, China’s state-owned commodity data provider. 

Cameron Hughes, battery markets analyst at CRU Group told Reuters:

Hughes was referring to the closure of mines around the world. 

In China, the government had doubled subsidies for electric vehicles in July 2023.

According to the Reuters report, more than 5 million cars, which were sold as of the middle of December, had benefited from the subsidies. 

According to Reuters, the subsidies by China for electric vehicles had supported a price rally in lithium in late 2024, and is expected to continue to boost prices this year. 

Lithium price outlook

"The uptick in lithium trade business in the fourth quarter of 2024 can be undeniably attributed to the policy of providing subsidies," a buyer at a mid-sized cathode material plant in China told Reuters.

The uptick in lithium prices will take place towards the end of 2025 as investors decline and spot market demand rises, Reuters quoted David Merriman, research director at metals research company Project Blue in the report.

According to Project Blue, prices are likely to stabilise around an average of $11,092 per ton this year.

Meanwhile, a Chinese broker quoted by Reuters forecasts prices to trade in a range of $8,184 per ton to $12,276 per ton in 2025. 

However, analysts also warned that the upside in lithium prices can be thwarted by a rise in production as mines can scale up the output of the metal by restarting operations. 

Additionally, the incoming Donald Trump presidency in the US could also affect demand for lithium.

The Trump administration could impose fresh tariffs on electric vehicle battery imports from China and cut down domestic incentives for EVs.