Lithium costs to stabilise in 2025 as mine closures, China EV gross sales ease glut, analysts say

SHANGHAI (Reuters) – Lithium costs are anticipated to stabilise in 2025 after two years of steep declines as shuttered mines and strong electrical car gross sales in China absorb an oversupply, though the potential for mines to reopen might cap beneficial properties, analysts and merchants mentioned.

A virtually 86% plunge in costs of the EV battery steel over the previous two years from its peak in November 2022 compelled corporations to mothball mines the world over. However market individuals say these closures imply buoyant demand ought to outpace provide this yr as China intensifies coverage help to spice up gross sales on this planet’s largest EV market.

The worldwide lithium provide glut is predicted to shrink by half to round 80,000 tons equal of lithium carbonate (LCE) from practically 150,000 final yr, in line with Antaike, China’s state-owned commodity knowledge supplier.

“We count on to see a value restoration for lithium in 2025 because the curtailments seen in 2024, and the potential of additional curtailments, will considerably scale back the market surplus,” mentioned Cameron Hughes, battery markets analyst at CRU Group, referring to mine closures with out giving additional particulars.

China doubled EV subsidies in July and greater than 5 million automobiles offered as of mid-December had benefited from the incentives.

China’s EV subsidies contributed to a lithium value rally late final yr, and may proceed supporting costs in 2025, three analysts and two merchants mentioned.

“The uptick in lithium commerce enterprise within the fourth quarter of 2024 will be undeniably attributed to the coverage of offering subsidies,” a purchaser at a mid-sized cathode materials plant in China mentioned on situation of anonymity as the client was not approved to talk to media.

Any enchancment in costs is prone to be felt in direction of the tip of 2025 as inventories are used up and patrons return to the spot market, mentioned David Merriman, analysis director at metals analysis firm Mission Blue.

Mission Blue expects costs to stabilize round a median of $11,092 per metric ton in 2025. Guotai Juan, a Chinese language dealer, forecasts a value vary of 60,000 yuan ($8,184) to 90,000 yuan ($12,276).

Probably the most-traded lithium contract on the Guangzhou Futures Change traded between 68,250 yuan and 125,000 yuan per ton final yr.

Analysts, nonetheless, cautioned that any vital value rise this yr is prone to be capped as manufacturing will be swiftly scaled up at many closed mines if it proves worthwhile.

Merriman mentioned that potential U.S. coverage adjustments beneath the incoming Trump administration, together with recent tariffs on EV battery imports from China or slashing home EV incentives, might also pose dangers to lithium demand.

($1 = 7.3312 Chinese language yuan)