No lithium market rebound this year

Chile’s SQM anticipates stable lithium prices for the remainder of the year but is “optimistic about a positive trend starting in 2026”, according to CEO Ricardo Ramos. While it expects 2025 demand to grow by 17pc, largely corresponding increases in supply will prevent prices from moving higher.

“Although we observed a decline in prices quarter-over-quarter in 2024, this downward trend softened during the fourth quarter, and we expect relatively stable prices during 2025,” says Gerardo Illanes, SQM’s CFO. Its average realised price dropped by more than 64pc year-on-year, from $30,467/t in 2023 to $10,936/t in 2024.

The firm observed a 25pc year-on-year increase in lithium demand last year to over 1.2mn t, with EV battery demand accounting for c.70pc of the global appetite and 15pc going into energy storage systems. Global EV sales reached almost 18mn units, marking a 26pc year-over-year growth, the firm says.

“For 2025, demand is expected to reach more than 1.4mn metric tons,” says Pablo Hernandez, SQM’s vice-president, strategy and development. “That is close to a 20pc year-over-year growth, with EVs remaining as a primary driver. China remains a dominant market in EVs while, of course, the US and Europe face policy uncertainties that could potentially impact our demand.”

Supply growth to meet demand hike

But this demand increase is set to be largely matched by supply expansion, keeping a lid on prices for the rest of the year. However, the supply overhang seen this year could narrow, as the pace of growth in production slightly lags that in demand.

Supply in 2024 topped 1.3mn t, up by more than 35pc when compared to 2023. But this rate of growth is expected to moderate to 10pc in 2025, less than the percentage growth in appetite, albeit supply will still approach 1.5mn t to remain above where SQM is seeing demand.

“This oversupply in 2025 is expected to be lower than last year, which may have an impact on prices with a potential upside in 2026,” Hernandez suggests.

SQM expects to see new volumes coming on from greenfield projects in Africa, Argentina and China, expansions to brownfield sites in Australia, and from its own Chilean operations, although Hernandez cautions that these additions will be “subject to supporting price levels”. He also forecasts “the market should continue to shift slightly towards lithium carbonate equivalent (LCE) production as cathode demand continues to gain more relevance, particularly in China”.

Another bearish factor for 2025 prices is that “refining in China remains with some overcapacity”, Hernandez cautions.

In terms of its own production, SQM aims to expand from c.200,000t in 2024 t o230,00 t in 2025. It is off to a good start, as Q1 sales volume “could reach at least 50,000t LCE, which is 15pc higher than Q1 ‘24”, according to Felipe Smith, SQM’s commercial vice-president for lithium. Volumes will further increase each quarter for Q2 to Q4, he predicts.

No China hoarding

And that is coming off a bumper Q4’24, when the firm sold a record 58,000t LCE, a figure that piqued one analyst’s curiosity. “I am just trying to understand why you are seeing 58,000t in Q4, which is normally not what we are seeing,” says Corinne Blanchard, director for lithium, solar and clean tech at Deutsche Bank.

Blanchard wonders if the higher sales are evidence of Chinese buyers trying to build up volumes in advance of an anticipated market rebound. “There has been some talk around in the industry of China maybe stockpiling and trying to buy as much volume at a low price,” she says. “We have heard as well from others in the industry that customers want volume as soon as possible.”

But SQM denies seeing any “price speculation” or “extraordinary building of inventories in the supply chain”. Instead, it observes “just reasonable inventories that you need to sustain this demand growth”, Smith says.