After years of punishingly low prices that have put much of the industry underwater, the world’s lithium miners have enjoyed weeks of surging prices as China tightens regulatory oversight and some mines there halt output amid a push to curb industrial overcapacity.
But how long the rally can last and when long-term profitability can be achieved amid the still oversupplied market for the key battery metal are questions that remain up for debate.
From a midyear trough of under USD 600 a metric ton, prices for spodumene, a key source of lithium, moved above USD 900 this month. The price, including duties, of lithium carbonate delivered to China rose 23% from Aug. 6 to Aug. 19, hitting RMB 87,500 (USD 12,000) per ton, a 13-month high, according to S&P. Lithium-exposed stocks are up 25% to 60%, according to Citi.
Industry participants and analysts see the moves in China potentially heralding the end of the worst of the downturn but caution the recent rally is driven by sentiment. They note the market remains oversupplied and prices too low to sustain the industry, let alone incentivize new supply needed to meet future demand growth as the energy transition gathers pace.
“It’s always very difficult to predict exactly the shape of the recovery,” said Neil Beveridge, a senior analyst at Bernstein, who called the moves in China “long overdue.”
“We think things get better from here, but the tightening probably comes in 2027. That’s the way things look from our numbers.”
The rally has been spurred on by two suspensions. In July, Zangge Mining halted its brine operation in Qinghai over compliance issues. More significantly, battery giant Contemporary Amperex Technology (CATL) announced on August 11 that it had halted its major Jianxiawo lepidolite mine in the lithium hub of Yichuan ahead of a permit expiry.
The site, responsible for about 3% of global supply, is expected to sit idle for at least three months, according to the company.
With seven other mines in Yichuan under review, speculation that further cuts may eventuate has led to volatile lithium contract trading on the Guangzhou Futures Exchange (GFEX), as traders bet on the price trend. The price for November delivery, the most traded contract, shot up 30% in August, before falling 15% from its peak.
Any sustained rally depends on how long the Jianxiawo shutdown lasts and whether the curbs extend further, according to Allan Pedersen, research director for lithium at Wood Mackenzie.
“The reaction [to the shutdowns] was not grounded in absolute production numbers, it is driven by sentiment,” Pedersen said, noting prices had already started to soften. “So the next weeks, months—depending on how long [the permitting issues] are going to take—is where we’re going to see the market starting to react more to the actual impact on the market.”
Lithium reached dizzying heights in 2022 when spodumene passed USD 8,000 per ton and lithium carbonate cracked USD 80,000 per ton. Since then, prices have plunged 80% after a surge of new supply from China and Chinese-operated projects in Africa created a glut.
Some miners like Australia’s PLS, formerly Pilbara Minerals, pushed forward with expansion plans despite the slump, betting they could weather the “lithium winter” better than higher-cost rivals.
On August 25, the company reported a AUD 169 million (USD 110 million) loss for the 2025 fiscal year, its first swing to a loss in four years, reflecting the low prices. CEO Dale Henderson called the current situation unsustainable. While prices were moving “in the right direction,” they continued to be “disconnected from fundamentals,” he said.
“In our view, it needs to go up further to get us to that level of supporting a sustainable industry,” Henderson told Nikkei Asia. “Is the worst behind us? It seems likely it’s in the rear view mirror now but of course nobody knows, given it’s such a volatile market and anything’s possible.”
Despite uncertainty over the next steps in China, the spike has provided relief to margin-squeezed miners. Chile’s SQM, the world’s biggest lithium producer by market value, sounded an optimistic note in its recent earnings report. The company recorded a 28% slump in second-quarter earnings but said it expects sales to grow 10% in the third quarter. It lifted its guidance for its Australian operations.
“The good news here is that we will have a better volume next quarter and a better price next quarter,” Felipe Smith, SQM’s senior commercial vice president of lithium, told analysts.
But China remains the major influencer. Citi said in a note to its clients in mid-August that China’s recent cuts would ease over the next three to six months and be insufficient to clear the structural surplus. It predicted prices for spodumene would remain around USD 950 for the rest of the year, but fall back to USD 800 per ton next year. Its three-month outlook for lithium carbonate was USD 11,000 per ton. For 2026, it’s USD 9,000.
“For a hard deficit to materialise, we think China domestic supply cuts need to persist for 1-2 years,” analyst Shreyas Madabushi wrote. “We see this as highly unlikely due to the longer-term importance of robust and affordable domestic lithium supply as a critical input for China’s battery supply chain, a key strategic industry.”
S&P Global Insights shared a similar view, saying any cuts to Chinese output will be short-lived.
“China will continue supporting domestic lithium production over the longer term to gain greater self-sufficiency,” it wrote.
Domestic output only covered 24% of China’s raw material demand for 2024, according to S&P, leaving its globally dominant refining sector vulnerable if prices soar.
Cameron Perks from Benchmark Minerals Intelligence said China seemed to be attempting a balancing act, supporting higher prices for its own mining industry while staying on guard for “dangerous” spikes that would hurt its battery makers.
“I think they’re trying to flex their muscle a little bit here to say, ‘We have some control of the supply-demand dynamics. We can bring this mine back online whenever we need to and keep prices range-bound,'” he said.
Tsutomu Aoki, CEO of the Toyotsu Lithium Corporation, said more than 60% of lithium suppliers are struggling to make a profit, and a price of at least USD 12,000 per ton for lithium carbonate is required to support the industry.
But with Chinese battery production outstripping demand, Aoki sees a gradual rather than steep increase in the years ahead.
“I’m not so optimistic,” he said. “But current prices are too low. Therefore [I expect] maybe a 30% or 40% price increase, but not doubling or tripling.”
The longer prices remain under a level that incentivizes new investment, the larger the correction will be when it comes, observers say.
Capital expenditure on lithium projects is expected to decline by 30–50% this year to its lowest level in three years, according to Bernstein. Beveridge said a price of USD 15,000–20,000 was needed to spur new investment.
Global lithium demand totaled 1,108 kilotons of lithium carbonate equivalent in 2024, while supply was 1,199 kilotons, according to Canaccord Genuity. In July, the firm predicted the market would turn to deficit—where demand outstrips supply—in 2027.
It noted global electric vehicle sales had risen a stronger-than-expected 30% in the first half of 2025 and said it was bullish on the roll-out of battery energy storage systems. UBS, meanwhile, forecasts a deficit in 2028.
YueJer Lee, fund manager at Arcane Capital, believes demand for batteries is being underestimated, as the downturn spurs cheaper prices and faster uptake. Lithium-ion battery pack prices fell 20% in 2024, the largest drop since 2017, according to the International Energy Agency.
Lee pointed to the fast uptake of heavy electric trucks. Battery-powered electric models accounted for 22% of all heavy-duty vehicle sales in the first half of 2025, compared to 8.6% in the same period of 2024, according to Commercial Vehicle World (CV World), a Beijing-based data provider.
Lee compared the trend to the electrification of taxi fleets in large Chinese cities.
“EVs have lowered the operating costs by more than half and lowered passenger fares significantly enough that diesel vehicles no longer make money,” he said. “The same is happening for trucks and delivery commercial vehicles.”
Ken Brinsden, CEO of Patriot Battery Metals, which is developing a lithium mine in Canada, said analysts’ predictions of per annum 15–20% increases in demand for raw lithium might be too conservative given the growing appetite for cheap batteries.
Given the lack of investment in new supply, this could be seeding the ground for another price boom, he said.
“The longer it’s a depressed price,” Brinsden said, “the more leverage that there will be when the market turns and becomes undersupplied, and I think there’s a reasonable chance that happens much faster than people are currently assuming.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.