Lithium: too much of a good thing?

In late 2022, market dynamics saw lithium chemicals prices spike to over US$80,000/t. Less than three years later, prices sit at around US$10,000/t (and even briefly dipped below US$9,000/t in June 2025). So, what’s happening in lithium markets, and how is the situation likely to evolve? 

We recently presented a briefing on the outlook for the lithium market, using data from our Lens Metals & Mining analytics solution to offer an in-depth explanation of why there’s currently a lithium chemicals surplus, and when it’s likely to end. Fill out the form at the top of the page to access an extract from the presentation, or read on for a quick introduction to the topic. 

What’s been happening with lithium prices? 

Lithium prices have been highly volatile in recent years. Lithium carbonate dropped below US$10 per kilo for two consecutive quarters in H2 2020, deterring investment in new production. As a result, demand growth exceeded supply growth for a period, leading to a supply shortage. An immature market reacted violently, with prices hitting extraordinarily high levels in 2022 as producers chose to build up strategic inventories, exacerbating the shortage. However, prices have since fallen again to fresh lows, making most production uneconomic. 

What’s driving lower prices? 

Demand growth is still strong, but is currently dwarfed by the growth in supply. Producers responded to the call for additional supply back in 2021 and 2022; however, the time it takes to construct new facilities and ramp up production has meant that peak supply is only now being reached three years later. With producers so far unwilling to curtail production in the lithium chemical market, the surplus will continue to grow until at least 2027, and the market risks being oversupplied for a long time. 

Where is oversupply coming from and why? 

Lithium chemical production has grown globally since the price spike in 2022; however, supply from China has grown noticeably faster than in the rest of the world, making up the majority of additions. The Chinese market is the most significant consumer globally, and economies of scale incentivise producing in higher volumes. New Chinese supply is coming from a variety of raw materials, including lepidolite and brine, although spodumene continues to dominate. 

When will the market balance? 

Lithium demand continues to grow, and is particularly strong for lithium carbonate due to the preference of LFP cathode chemistries used in both electric vehicles and energy storage applications.

Meanwhile, data on new projects indicates that while supply will continue to increase, growth will decelerate in the years to 2030. However, unless action is taken, oversupply will still be substantial over the next few years – particularly for non-battery grade lithium chemicals. As a result, a significant proportion of lithium production will continue to be loss-making. 

What can be done to address the issue? 

There are two main ways the industry can act to address oversupply (and resulting low prices). The first is simply to allow stockpiles to build up, with the expectation of selling products at a later date when prices recover.

However, the issue of maintaining large inventories is new to the lithium industry and creates a range of challenges, from the delay in receiving revenue to the potential degradation of the product over time.

The alternative is to curtail production; this saves on storage and/or reprocessing costs but implies a permanent loss of potential revenue. Regardless of which route is taken, a key question will be who takes the hit. 

Learn more 

Remember to fill in the form at the top of the page to download the presentation extract, which includes a range of charts providing more detail on this topic. You can also visit our Lens Metals & Mining homepage to find out more about our data and analytics solutions for lithium (as well as a full range of other metals).