[Christian Harris]

Lithium carbonate prices dropped below CNY 75,000 per metric ton in March 2025, marking the lowest level in four months amid persistent pressure from an oversupplied market.

The decline reflects a combination of weak demand and robust supply, with Chinese electric vehicle (EV) sales falling 3% month-over-month in February.

SAIC, one of China’s largest automakers, was particularly impacted by EU sanctions and other trade restrictions targeting China’s subsidised EV sector.

Despite the downturn, battery inventories are expected to remain elevated as EV manufacturers show little urgency to secure new supply contracts.

Lithium miners are hesitant to shut down operations, prioritising market share and maintaining business relationships with governments and battery producers.

This dynamic was highlighted by CATL’s decision to reopen its lithium lepidolite mine in Jiangxi Province, following its successful IPO in Hong Kong.

Meanwhile, Ganfeng Lithium launched its newest mining project in Salta, Argentina, further adding to global supply.

In a significant move, Rio Tinto announced its entry into the lithium market by acquiring US-based Arcadium Lithium for $6.7 billion, signalling its confidence in the long-term demand for the metal.

This acquisition underscores the growing interest of traditional mining giants in the lithium sector, despite current price pressures.

The lithium market is grappling with oversupply concerns as global production continues to outpace demand.

Countries like Chile, Argentina, and Mali are ramping up output, with analysts predicting the market surplus will persist through 2025, keeping prices under pressure.

Sluggish EV sales, particularly in China, have further dampened demand, with SAIC’s struggles highlighting the broader challenges facing Chinese automakers.

Companies like CATL and Ganfeng are leveraging cost efficiencies and strategic partnerships to maintain production levels, even in a low-price environment.

While the lithium market faces near-term headwinds, long-term demand is expected to rebound as EV adoption accelerates and new battery technologies, such as lithium iron phosphate (LFP), gain traction.

However, any significant price recovery will likely depend on a reduction in oversupply and stronger policy support for EVs globally.

What do you think—will lithium prices stabilise, or is the market in for a prolonged downturn? 🤔📉

Chart: Trading Economics

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