Excess supply intensifies Geometry of lithium price trend in 2025?

Several large-scale lithium salt projects have been put into production recently. A company whose Goulamina lithium pyroxene project in Mali, Africa, Phase I officially went into production on December 15,2024, with a planned annual production capacity of 506,000 tons of lithium concentrates in Phase I of the project; Tesla has announced that it has broken ground for its large-scale lithium refinery located in Texas, U.S. and it has been reported that Tesla has invested more than 1 billion U.S. dollars (about 7.3 billion yuan) in the plant; Salt Lake Co., Ltd. also said that it has an annual production capacity of 40,000 tons of lithium carbonate, and the newly launched 40,000 tons of lithium salt integration project is progressing.

As the core raw material of lithium industry, lithium carbonate has an obvious impact on the core cost. The price trend of lithium not only affects the profits of upstream materials enterprises, but also affects the terminal core and even the price of cars. Based on the fluctuation of lithium prices, the industry has launched various measures, such as the introduction of lithium carbonate futures varieties, lithium carbonate long term agreement mechanism signed, Ningde Times introduced the rebate mechanism and so on. With the commissioning of the above-mentioned projects, the supply and demand of lithium carbonate in 2025 will also be affected. 

From 2022 to 2024, with the increase of lithium carbonate production projects, the overall supply and demand changed from tight balance to supply exceeding demand. Data from the Ministry of Industry and Information Technology show that from January to October, the output of battery-grade lithium carbonate was 540,000 tons, a year-on-year increase of 43%; Compared to the same period, the total output of lithium batteries from January to October was 890 GWh, up 16% year-on-year, and the supply of lithium carbonate continues to exceed the downstream demand growth. The industry insiders have previously analyzed that the explosive growth of the new energy industry in the past few years has promoted the large-scale expansion of the upstream and downstream industrial chain. During the construction cycle of lithium mine projects, due to the environmental assessment, production line construction and other factors, it has also made the supply of lithium carbonate in the past tense and balanced period, which superimposed the trend of downstream manufacturers to increase their stocks and push up lithium prices. With the continuous completion of lithium mine projects, 2025 is becoming a year of concentrated discharge of lithium carbonate. According to the Chilean Copper Commission data, in 2025 there will be 22 new lithium mining projects put into production. The new lithium carbonate equivalent of 500,000 tons, is expected to 2025 lithium carbonate production of 1.59 million tons, demand for 1.4 million tons, lithium carbonate oversupply expanded to 190,000 tons.

At present, the upstream and downstream batteries, materials companies have reached a consensus on the trend of lithium prices. Based on the increase in the supply of lithium carbonate and battery recycling brought about by the recycling of resources, lithium prices long-term downward trend unchanged. However, judging from the supply structure of lithium carbonate, the price of lithium carbonate is still supported in the short term.

According to market data, spodumene accounts for 50% and salt lake lithium accounts for 30% of the global lithium carbonate production. And in 2025, more than 70% of the new lithium salt projects will come from the hard rock lithium project, which means that the ore lithium ore is still the main source of lithium carbonate supply. The cost of ore lithium ore exceeds 50,000-70,000 tons/ton. As of December 17, the spot price of domestic battery-grade lithium carbonate closed at about 75,000 yuan/ton.

Under the influence of the current widening supply of lithium carbonate and the cost of lithium ore, it is expected that the price of lithium carbonate will be limited to falling in 2025.