China’s rising electric vehicle sales and manufacturing in recent weeks have pushed up Chinese lithium carbonate spot prices and lithium futures as battery makers begin to restock lithium inventories.
Yet, the recent uptick in China’s lithium demand will not be enough to erase the sizeable global glut that has accumulated this year, leaving the market in a likely surplus throughout 2025.
Lithium prices have crashed by 80% since their peak in 2022 amid slowing global EV sales with the phase-out of subsidies in several major auto markets, coupled with a surge in supply, especially from Chinese companies operating in Africa. This year, Chinese miners and refiners have been driving a surge in African lithium production, dominated by companies fully or partially owned by Chinese entities.
The market surplus and the slower EV sales in Western markets have dragged lithium prices down.
China’s most recent rebound in demand has pushed local lithium prices higher. But the fundamentals of the global lithium market haven’t changed much—supply continues to outpace demand, setting the stage for another year of oversupply and depressed prices, analysts say.
China’s EV sales in recent months have been the bright spot in the global electric vehicle market. Toward the end of the year, EV sales and manufacturing in China expanded as the large stimulus from the authorities to boost the economy included incentives for consumers to swap their old conventional vehicles with EVs.
Last month, China’s EV sales jumped by 11.1% compared to September, to 1,429,000 units. EV manufacturing also rose, by 11.9% month-on-month, to around 1,463,000 vehicles, per data from Benchmark Minerals.
EV and plug-in hybrid sales surged by 56.7% from a year ago and accounted for 52.5% of all Chinese car sales, making October the fourth consecutive month in which new energy vehicles outsold gasoline cars.
As EV demand rises, Chinese supply chain companies have tentatively started to restock lithium products, and procurement activity intensified amid high utilization rates at cathode producers. The uptick in demand pushed China’s lithium carbonate spot prices to a three-month high this week. Lithium carbonate futures on the Guangzhou exchange have also jumped this week, according to data compiled by Bloomberg.
Yet, the market continues to be oversupplied, which has prompted global lithium miners to curtail production and shrink their workforce—at least until market conditions improve.
Just this week, Australian miner Mineral Resources said it was shutting down its Bald Hill lithium mine amid a crash in lithium prices in another project curtailment in the industry.
The low lithium prices have hit other producers and projects, too.
The world’s largest lithium producer, North Carolina-based Albemarle, booked a net loss of $1.1 billion for the third quarter amid lower pricing in the lithium value chain.
As part of measures to reduce costs and operations, Albemarle will be reducing its global workforce by an expected 6-7% and is slashing its 2025 capital expenditures by around 50% versus 2024 to an anticipated range of $800 million to $900 million.
This week, Australia’s Liontown Resources said it would reduce production from its Kathleen Valley lithium project, “to prioritise higher margin ore at reduced costs to adapt to the low-price lithium environment.”
Pilbara Minerals has also announced a suspension of a lithium processing plant in Western Australia, but on its own, it will not be enough to stop the oversupply, according to Will Adams at Fastmarkets, a commodity price reporting agency.
Fastmarkets continues to expect a global surplus of around 90,000 tons of Lithium Carbonate Equivalent (LCE) next year, on top of this year’s more than 100,000-ton surplus.
Despite the fact that Chinese lithium carbonate demand this month defied forecasts of a typically slow year-end consumption, “The market surplus situation hasn’t fundamentally shifted yet,” Zhang Weixin, an analyst at China Futures, told Bloomberg this week.
By Tsvetana Paraskova for Oilprice.com
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