According to the Financial Associated Press on January 8 (Editor: Xiao Xiang) after experiencing a cyclical adjustment over the past two years, many industry insiders expect that the fate of lithium prices in 2025 may still not be optimistic - as lithium supply continues to be in surplus, and if prices rise, some mines may restart, indicating that this Battery metal is still unlikely to achieve a significant rebound this year.

Since the end of 2022, due to oversupply and electric vehicle demand growth being lower than expected, lithium prices have suffered significant declines, with a cumulative drop of nearly 85% over the past two years. This wave of lithium price collapse has also led some mines to cease production.

Currently, most Analysts still believe that there will be a supply surplus this year, although they expect the surplus amount to be less than last year's.

According to Statistics from Fastmarkets, the globally renowned Battery materials intelligence firm Benchmark Mineral currently expects that the price of lithium carbonate in North Asia will be $10,400 per ton this year, approximately the same as the price at the end of 2024. The average price forecast by four analysts listed by Fastmarkets for next year is $10,685.

The fundamental reason why miners are reluctant to reduce supply or prematurely restore supply is that, with the acceleration of the energy transition, lithium demand is expected to grow rapidly over a long period. Geopolitical tensions - including the prospect of hefty tariffs, may also encourage miners to continue mining, as they fear that the market may fragment under the backdrop of a trade war.

Federico Gay, Chief Lithium Analyst at Benchmark Mineral Intelligence, stated, "This supply volatility may limit the upside potential of lithium prices in 2025, as the rapid restart of mines could lead to a more serious supply surplus than currently predicted."

Last year, some global lithium producers, struggling due to reduced profits, have suspended production or delayed expansion, helping lithium prices stabilize since mid-August, but this has not been sufficient to stimulate a significant price rebound. Currently, there remain concerns that a price rebound may lead miners to rapidly expand again - in the view of these industry insiders, Africa and China are considered the most likely places for this to occur.

New supplies may continue to emerge.

CRU Group Analyst Thomas Matthews cited Australia's Greenbushes, Wodgina, and Pilgangoora projects as examples, stating, "Those companies with previously reduced production utilization may restart within a month. Market balance will depend on whether we see these Businesses accelerating or whether further supply reductions will occur."

This year will also see new supplies coming online. Benchmark Mineral believes that production in Zimbabwe, China, and Argentina will increase compared to last year, while the CRU Group indicated that capacity in Mali and Brazil will also grow rapidly from a lower base.

In a report in November, Bank of America stated, "New supplies are continuously entering the market, meanwhile, high-cost operators on the margins are not shutting down in large numbers. This is partly driven by strategic or geopolitical reasons: producers do not want to reduce activity in a rapidly growing market."

In terms of demand, the outlook for Global electric vehicle sales growth is not particularly robust, especially in the USA, as President-elect Trump's preferences for fossil fuels seem to weigh on lithium prices. Following the Republican Party's significant victory in the November elections, some industry media have lowered their forecasts for the share of electric vehicles in new Passenger Vehicle sales in the USA, adjusting the estimate for the end of this decade (2030) from 48% to 33%.

Alice Yu, Senior Analyst at S&P Global Commodity Insights, stated that while the era of electric vehicles led by Chinese manufacturers has begun, Global Auto Manufacturers and policymakers are still at a crossroads debating whether to continue promoting electrification and embrace the new electric vehicle era.

The prospects of the China-USA trade dispute may also lead to increased volatility in lithium prices. Matthews from CRU noted that there will naturally be some uncertainties in this regard. Tariffs and export controls are widely known. The cancellation of subsidies and easing of emission standards may also bring bad news to the market.