Can the lithium surge continue?

Lithium prices have risen sharply this year on strong electric vehicle (EV) battery demand and supply disruptions in Mainland China. But as analysts warn of looming project restarts, the question remains: can the rally last?

BMI, a FitchSolutions Company, has lifted its 2025 average lithium price forecasts to $US10,100 per tonne for Mainland Chinese lithium carbonate 99.5 per cent and $US9700 per tonne for lithium hydroxide monohydrate 56.5 per cent.

The firm said robust energy transition demand, alongside supply curtailments in China, is sustaining a bullish market narrative.

“A robust energy transition demand, alongside supply curtailments in China, is sustaining an optimistic narrative, supporting price recovery,” BMI said. “We highlight that downside risks to lithium price strength are still present, as anticipated supply restarts threaten to stall gains, possibly before year-end.”

The lithium market has been on a rollercoaster this year. Production halts at key projects, including Contemporary Amperex Technology’s (CATL’S) Jianxiawo mine, pushed prices to 13-month highs in August, with lithium carbonate hitting $US12,262 per tonne.

China’s export controls on lithium-ion battery supply chains briefly added to uncertainty before some restrictions were suspended in November.

Global demand remains strong, with lithium critical for EV batteries. BMI forecasts global lithium demand will rise 17 per cent in 2025, underpinned by an 18.7 per cent increase in global passenger EV sales.

China will continue to dominate, supported by policy incentives, rapid product refresh cycles, and intense competition in the EV sector.

On the supply side, global production is set to grow 16.1 per cent in 2025, led by Australia and China, while new players in Argentina and Zimbabwe expand output.

Longer-term risks include the adoption of batteries using less or no lithium and faster recycling technologies, which could weigh on prices.