Total lithium demand by sector and scenario, 2020-2040. Last updated 3 May 2021. Download chart. Cite Share. IEA (2021),, IEA, Paris https://, Licence: CC BY 4.0. Sustainable Development Scenario kt share of clean energy technologies 2020 2030 2040 2030
Global lithium demand 2022-2025. Demand for lithium worldwide in 2022 and 2023 with forecasts for 2024 and 2025 (in 1,000 metric tons of lithium carbonate equivalent)
The fluctuating prices of lithium have significant implications for industries and economies worldwide. This article explores the dynamics of lithium pricing, offering insights into historical trends, current market conditions, future predictions, and the key factors that drive its valuation.
Almost 60 percent of today''s lithium is mined for battery-related applications, a figure that could reach 95 percent by 2030 (Exhibit 5). Lithium reserves are well distributed and theoretically sufficient to cover battery demand, but high-grade deposits are mainly limited to Argentina, Australia, Chile, and China.
By 2030, it is anticipated that the global demand for lithium will be more than quadruple, rising from 720,000 metric tons in 2022 to an estimated 3.1 million metric tons.
Lithium, a critical element in modern technology, has become a focal point in discussions about renewable energy and electric vehicles (EVs) due to its importance in batteries. The fluctuating prices of lithium have significant implications for industries and economies worldwide. This article explores the dynamics of lithium pricing, offering insights into historical trends, current market conditions, future predictions, and the key factors that drive its valuation.
Lithium is a soft, silvery-white metal belonging to the alkali metal group. It is highly reactive and flammable, making it essential in various industrial applications. Most notably, lithium-ion batteries power everything from smartphones to electric vehicles.
The demand for lithium has surged with the rise of renewable energy technologies and the global push towards reducing carbon emissions. Lithium''s unique properties make it irreplaceable in high-performance batteries, which are pivotal in energy storage solutions and portable electronics.
Lithium is also on several countries'' Critical Minerals lists, such as the U.S., Canada, and Australia.
Lithium prices have seen dramatic changes over the past decade. From 2010 to 2015, prices remained relatively stable, with minor fluctuations due to steady demand and supply conditions. However, from 2015 onwards, prices began to soar, driven by the booming EV market and increased demand for renewable energy storage solutions.
By 2017, lithium prices had tripled compared to their 2015 levels. This spike was primarily due to the rapid expansion of China’s EV market and increased lithium mining and production investments.
The year 2018 saw prices peaking, but by 2019, an oversupply in the market led to a sharp decline. From 2019 to 2021, prices remained subdued, reflecting a period of market correction and stabilization.
In 2022, however, a record-breaking price rally occurred due to a large supply deficit. Lithium''s largely agreement-based supply model also contributed to this squeeze, sending lithium prices skyrocketing over 5x. This push would continue until midway through the year as China re-implemented full lockdowns nationwide due to rising COVID-19 case numbers, leading to a brief economic slowdown.
While the end of lockdowns coincided with another surge in demand, sending lithium prices to their all-time high of 575,000 CNY (USD 80,000) per tonne, this rally was short-lived. With inflation rates on the rise and EV supply finally overtaking demand, lithium prices plummeted back down in 2023 before stabilizing around the 100,000 CNY (USD 14,000) level, where it continues to trade today.
The past few years have been marked by significant market adjustments. Producers ramped up supply, anticipating continuous high demand, but the market did not grow as quickly as expected.
Consequently, this led to a surplus, driving prices down. Moreover, technological improvements in mining and processing lithium contributed to cost reductions, which also played a role in lowering market prices during this period.
One of the main factors contributing to the volatility of lithium prices is that unlike other minerals like gold or copper, the lithium markets are still fairly young and hence the spot market is not very well established. With the recent explosive growth in lithium demand added on top of that, the result is a market sector that''s very much still going through growing pains.
Right now, instead of purchasing contracts for delivery on a spot market most lithium consumers choose to directly sign long-term offtake agreements with lithium miners, securing a guaranteed supply at a fixed price. The current state of the lithium markets has drawn parallels to the iron ore market prior to the 2010s, where pricing would follow an annual benchmark negotiated between miners and steelmakers each year.
Something similar is happening in the lithium markets, with top producer Albemarle having begun holding auctions for its mined lithium since March 2024. These auctions allow buyers to secure pricing that''s more truly reflective of the present supply-demand dynamic, as opposed to being forced to lock in fixed long-term pricing to avoid not having enough supply.
The lithium spot market has been seeing increasing activity as well, as shown in the chart above. In conclusion, while lithium prices will likely continue to be volatile for the foreseeable future, there are changes under way that will help stabilize the market as it matures and develops.
As of 2024, lithium prices have stabilized from their major plunge of 2022-2023. The current price is attributed to several factors:
The increased focus on domestic production in countries like the United States and Australia is also reshaping the market landscape. Efforts to reduce dependence on imported lithium are driving investments in local mining projects, which, in turn, affect global supply and pricing dynamics.
Looking ahead, the future of lithium prices is shaped by a combination of technological, economic, and geopolitical factors.
Analysts predict that demand for lithium will continue to grow, driven by several key trends:
Several factors influence lithium prices, creating a complex and dynamic market landscape:
The global lithium market is dominated by a few key players who control a significant share of the mined supply. Here are five of the top producers from 2023, who combined for roughly half of total global production:
The lithium market faces several challenges and opportunities that will shape its future:
The lithium industry comprises various types of companies, each playing a crucial role in the supply chain. These companies can be broadly categorized into technology, exploration, production, extraction, and refining. Understanding the distinct roles and contributions of each type is essential for grasping the complexity of the lithium market.
Role and Contribution: Technology companies are pivotal in the development and advancement of lithium battery technologies. These firms focus on enhancing the performance, efficiency, and safety of lithium-ion batteries. Innovations by technology companies drive the demand for lithium by creating new applications and improving existing ones.
Impact: Technology companies push the boundaries of battery capabilities, influencing the overall demand for high-quality lithium and driving advancements that make renewable energy solutions more viable and efficient.
Role and Contribution: Exploration companies are responsible for discovering new lithium deposits. These firms conduct geological surveys, drilling, and sampling to identify potential lithium reserves. Exploration is the first step in the lithium supply chain, determining future supply availability.
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