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| lithium market |
The lithium market is undergoing significant transformation due to recent policy changes and supply disruptions. While the market has been oversupplied for several years, driven by expectations of skyrocketing demand from the energy transition, a new wave of export controls imposed by China is adding another layer of complexity to an already volatile market.
Oversupply and Price Decline
For the past few years, the lithium market has been grappling with oversupply. The surge in production, especially from Australia’s abundant spodumene supply, along with rapid expansions in China’s lepidolite and brine production, has resulted in high inventories across the value chain. As a consequence, lithium prices have been on a steady decline since 2022. The lithium carbonate spot price, which had reached up to 605,000 yuan per tonne in November 2022, plummeted to approximately 73,000 yuan per tonne in October 2025.
In response to these sustained low prices, many producers across Asia, Australasia, and Latin America have curtailed production or delayed expansion projects. However, despite these actions, the market remains oversupplied, prompting discussions at LME Week on how short-term supply disruptions could rebalance the market.
China Tightens Lithium Technology Exports
A key topic at LME Week 2025 was the new export controls announced by China's Ministry of Commerce on October 9. Effective from November 8, these measures will require exporters of lithium-related products—such as high-performance lithium-ion batteries, cathode materials, and production technologies—to obtain licenses before shipment. The affected products include lithium iron phosphate (LFP) cathode materials, which are integral to the manufacturing of batteries used in electric vehicles (EVs) and energy storage systems (ESS).
While these export controls don’t constitute an outright ban, they will create a much stricter approval process. This is seen as a response to international trade dynamics, particularly the U.S. OBBB (One Big Beautiful Bill) Act, and concerns over potential technology transfers to Western markets. The export restrictions are expected to complicate partnerships between Chinese producers and Western battery makers, potentially slowing technology sharing and further impacting the flow of high-grade lithium materials.
Market Speculation on CATL and Zange Projects
Another key area of focus at LME Week was speculation surrounding major Chinese lithium projects, especially the restart of CATL’s Jianxiawo lepidolite project in Jiangxi province. Reports in early September indicated that CATL's application for a mining permit was advancing faster than expected, with production anticipated to resume soon. While these reports have not been officially confirmed, the possibility of an early restart has contributed to volatility in the market, particularly impacting spodumene and lithium carbonate futures.
Similarly, Zange Mining, another prominent Chinese miner, has recently received a new mining permit for its Qarhan salt lake project in Qinghai province. Although mining activities have yet to resume, the expected rise in raw material supply could further exacerbate the already-existing oversupply of lithium, leading to downward pressure on prices.
Conclusion: Policy and Supply Dynamics at the Forefront
The lithium market is now at a crossroads where export controls and domestic production shifts may have a more pronounced effect on prices and global supply chains than traditional supply-demand dynamics. The imposition of export controls could disrupt the flow of critical materials, while the potential restart of major Chinese lithium projects could intensify the existing oversupply situation.
As the industry heads into the final months of 2025, market participants are keenly watching these developments, knowing that the interplay of policy changes, technological advancements, and production realities will define the future direction of the lithium market.
ScrapInsight Commentary
China’s new export controls on lithium technology could significantly alter global supply chains, potentially tightening high-grade cathode material availability. If major Chinese projects like CATL’s Jianxiawo restart sooner than expected, the oversupply trend may persist, putting downward pressure on lithium prices in the short term.
