China continues lithium production despite glut - Aims to maintain market dominance in electric car sector
Many lithium mines, run by Chinese companies, are continuing to produce lithium for electric vehicle batteries, even though prices are low enough to cause major production cuts. This is helping battery manufacturers.
Continued production shapes the outlook for years of oversupply and reduced prices. Some battery makers own mines or have injected cash into operations to keep them afloat, company reports show.
The mines were also maintaining production to maintain market share and good relations with governments, and because shutdowns and restarts can lead to technical problems, miners and analysts explained.
So far, about 12 lithium producers have temporarily shut down loss-making mines, cut production or delayed expansions. Many others are still operating, meaning global supply is likely to last for several years and keep prices low, experts said.
The price of lithium hydroxide has fallen nearly 90% since hitting a peak of $85 a kilogram in December 2022, after rising more than sevenfold over the previous 18 months.
Global lithium supply is forecast to grow 25% this year and 15% in 2025, UBS said. Increased production has created a glut of lithium, which is vital for electric vehicle batteries. Surpluses are expected to continue through 2027, despite recent cutbacks in loss-making mines and project delays.
China has some of the highest-cost lithium mines, but many in the country, Australia and Africa are unlikely to close because they are integrated into supply chains, according to analysts.
They noted that China's government considers the electric car and battery sector of strategic importance and is keen to maintain it with stable supplies of raw materials and low costs.
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