Metals investors were already concerned by the growing deflationary impact of China’s processing capacity overhang in the EV, battery and renewables value chains. Thanks to Trump’s predilection for tariff diplomacy, there are now fears an ongoing trade war with China could completely upend markets.

To make sense of the seismic shifts impacting metals, we held the Wood Mackenzie Future Facing Commodities Forum on 30 April 2025. Fill out the form to download the slide deck of our presentation on the outlook for lithium, or read on for a quick summary of some of the key points.

The problem: a looming lithium supply surplus

Significant market tightness in 2021 and 2022 led to high lithium prices, which prompted a global call for increased production to boost supply. Producers responded, but the time required for asset construction has meant a delay in additional supply hitting the market. The first new volumes started arriving in 2023 and more production will continue to be added through 2027.

The answer: curtailment – but will it happen?

Strong Chinese supply growth is set to continue, although the growth rate will decline as new assets reach steady-state production. Increasingly, the largest proportion of growth will be from the rest of the world as new assets outside China are commissioned. The market will therefore experience a growing surplus unless curtailment takes place.

In our view, curtailments should predominantly come from China, which is the largest producer and where most production is suffering from low or negative margins in the current price environment. However, China is also the world’s biggest consumer, which presents a challenge to curtailments. What’s more, increasing production can lead to lower unit costs, which incentivises producing higher volumes rather than cutting supply.

The big question for the sector is, will sufficient capital be available to survive the downturn until demand growth catches up?

Learn more about the outlook for lithium

Don’t forget to fill in the form at the top of the page to receive your complimentary copy of the lithium slide deck from our Future Facing Commodities Forum.

This includes a wide range of charts covering the lithium market in more detail, as well as aluminium, copper, nickel, rare earths and cathode & anode precursors.