Prices have fallen by over 80 per cent due to oversupply but now shuttered mines and strong electric vehicle sales in China look to have ended the glut of lithium that has affected the market.
The plunge in prices of lithium over the past two years from its peak in November 2022 forced many companies to mothball mines. Consequently, those closures should mean buoyant demand will outpace supply this year as China intensifies policy support to boost sales in the world's largest EV market.
The global lithium supply glut is expected to fall by half to around 80,000 tons equivalent of lithium carbonate (LCE) from nearly 150,000 last year, according to Antaike, China's state-owned commodity data provider.
China doubled EV subsidies in July and more than 5 million cars sold as of mid-December had benefited from the incentives and this is expected to support lithium prices in 2025.
Analysts have cautioned, however, that any significant price rise this year is likely to be capped as production can be swiftly scaled up at many closed mines if it proves profitable.
In addition, any changes to US trade policy under the incoming Trump administration, such as fresh tariffs on EV battery imports from China or the cutting of domestic EV incentives, could pose significant risks to lithium demand.
