China's Lithium Prices Fall to 4-Year Low Amid Oversupply and Trade Tensions

China's Lithium

Oversupply and weaker export demand push lithium carbonate prices to multi-year lows in China

Chinese Lithium Carbonate Prices Plunge on Oversupply

Chinese lithium carbonate prices have dropped to a four-year low due to rising supply and weaker global demand. Prices started declining after CATL resumed its Jianxiawo lithium lepidolite concentrate operation in early February 2025. This facility contributes 6% of China’s total LCE capacity, but the mine itself remains offline as CATL sources ore locally.

At the same time, China’s lithium carbonate imports surged by 48% year-on-year to 32,450 tonnes in January–February 2025. Chile accounted for 62% of these imports, followed by Argentina at 34% and South Korea at 3.2%. Chilean producers like SQM and US-based Albemarle are ramping up output, further intensifying supply pressure.

Demand Weakens Under Policy Shifts and Tariffs

Demand for lithium has softened after China revoked energy storage installation mandates for new energy projects in February 2025. This particularly affected lithium-iron-phosphate batteries, which rely heavily on lithium carbonate. Additionally, US import tariffs on Chinese lithium-ion batteries will hit 48.4% by January 2026, impacting export potential.

Despite a 59% year-on-year surge in lithium-ion battery exports in early 2025, much of it was front-loaded. Exporters rushed to ship products before anticipated US tariff hikes, with 26% of shipments headed to the US. However, market participants believe Chinese battery exports may decline sharply in the coming months.

Market Outlook and Price Forecast

As global supply continues to rise and demand remains subdued, prices are expected to dip further. Some analysts predict prices may hover around Yn70,000/tonne ex-works, unless a major inventory restock occurs. Producers are closely monitoring both tariff developments and restocking trends among downstream battery manufacturers.

The Metalnomist Commentary

China’s lithium market is entering a new phase where global trade dynamics now rival domestic supply in pricing power. With inventory levels rising and policy uncertainty in key export markets, stakeholders must recalibrate demand forecasts and sourcing strategies.