Lithium Prices to Bottom Out in 2025 as Supply Growth Slows

Lithium

Lithium Prices Decline Sharply from 2022 Highs

The global lithium market is set for a critical shift in 2025 as price declines trigger supply reductions and stronger demand emerges. Market analysts predict that lithium prices will bottom out in 2025, driven by slower supply growth and recovering downstream sectors.

As of January 20, 2024, Chinese domestic prices for 99.5% grade lithium carbonate—a key raw material for electric vehicle (EV) batteries—were assessed at ¥77,500–78,500 per ton ($10,594–10,731 per ton) ex-works. This represents an 86% drop from the all-time high of ¥561,000–576,000 per ton in November 2022. The sustained price downturn has already forced some lithium producers to cut or halt production. Analysts forecast that Chinese lithium carbonate prices will stabilize between ¥70,000–100,000 per ton by the end of 2025 if supply constraints persist.

Strengthening Demand to Support Lithium Prices

Despite the recent price slump, global lithium demand is expected to grow significantly across multiple industries in 2024 and beyond. China, the world’s largest battery producer, reported a 42% increase in newly installed power battery volumes, reaching 548.4 GWh in 2024. Notably, lithium iron phosphate (LFP) batteries dominated the sector, accounting for 74.6% of total production.

China's LFP battery material production also surged, reaching 2.3 million tons in 2024, marking a 53% year-on-year increase. Industry participants expect output to expand further to 3–3.5 million tons in 2025, reinforcing China’s dominant role in the global lithium-ion battery supply chain.

EV and AI Growth to Drive Lithium Consumption

The electric vehicle (EV) market remains a key catalyst for lithium demand. China’s new energy vehicle (NEV) sales are projected to exceed 16 million units by 2025, fueled by continued government incentives and policy support.

Beyond EVs, the consumer electronics sector is also contributing to rising lithium demand. Global smartphone shipments increased by 6.4% to 1.24 billion units in 2024, according to market research firm International Data Corporation (IDC). IDC forecasts that smartphone sales will maintain an upward trajectory in 2025, particularly as artificial intelligence (AI) smartphone shipments surged to 170 million units in 2024, more than double the previous year’s total.

Outlook: Market Balancing Expected in 2025

While lithium prices have declined significantly since late 2022, supply-side contractions and robust demand growth across EVs, battery storage, and AI-driven devices will likely stabilize the market. Analysts anticipate a price floor in 2025, marking a potential recovery phase for lithium producers and investors.