Lithium: Cycles

One of the sharpest booms and busts ever

Lithium has had one of the sharpest booms and busts of any commodity. USGS, citing Benchmark, reports that US battery-grade carbonate averaged $11,700 per ton in 2021, $63,700 in 2022, then $39,000, $11,800 and $9,000 by 2025. Electric-vehicle forecasts drew in a wave of new mines and converters, which arrived as demand growth fell short of expectations. Oversupply then crushed prices and some projects were postponed. Strong EV and grid-storage sales then lifted Chinese spot carbonate from about $9,300 per ton in January 2025 to $10,300 in November. Projects take years, so overshoots recur.

US price, Battery-grade lithium carbonate, annual average (Benchmark)

Super-cycles in lithium

Lithium is too young a mass market for a century-long super-cycle record, but it has had two violent booms and busts in a decade, each driven by EV expectations running ahead of new supply. Prices rose several-fold in 2016-2018, fell back, then went far higher in 2021-2022 as EV sales surged and stockpiling in China's chain fed on itself. The US contract price for battery-grade carbonate averaged $63,700/t in 2022, then collapsed to $9,000 in 2025 as new mines and converters arrived. A rebound in late 2025 and early 2026 on storage demand and Chinese mine suspensions faded by October 2026. Long project lead times and a deep Chinese conversion chain make overshoots likely to recur.

1. 2015-2018

   China's EV subsidy boom and the first gigafactories drove demand for carbonate and hydroxide ahead of new supply; Australian spodumene mines restarted or opened and prices fell back in 2019. No verified annual or monthly price series was found for these years, so levels are not given.

2. 2021-2022

   EV sales more than doubled, inventories along the Chinese chain were thin and buyers scrambled; the price spike pulled in a wave of new mines in Australia, Africa and South America and lepidolite in China.

   US annual average battery-grade carbonate (Benchmark via USGS) rose from $11,700/t in 2021 to $63,700/t in 2022.

3. 2023-mid 2025

   New supply arrived as EV growth slowed outside China; lithium fell below the cost of many hard-rock and lepidolite producers, and projects were delayed or mothballed (PLS put Ngungaju on care and maintenance).

   US average $39,000/t in 2023, $11,800/t in 2024 and $9,000/t in 2025; China CIF spot about $9,300/t in January 2025 (USGS).

4. Late 2025-2026

   Storage demand grew more than 60% a year and Chinese mine disruptions tightened supply; futures liquidity rose on GFEX, CME and LME. The rally faded by the autumn of 2026.

   China CIF spot about $10,300/t in Nov 2025 (USGS); Albemarle cites about $20/kg LCE average in Jan 2026; Fastmarkets carbonate CIF CJK $24.50-25.80/kg in mid-May 2026, down to $15.20-18.50/kg on 2 Oct 2026.

What drives the cycle

• EV sales and battery size. EVs take about two-thirds of lithium use; Chinese and European EV sales and pack sizes set the trend.
• Stationary storage build-out. Grid batteries became the fastest-growing use, and are price-sensitive buyers of cheap LFP cells.
• Chinese conversion and inventory cycles. Most spodumene is converted in China, and restocking or destocking across converters, cathode and cell makers amplifies price moves.
• Project lead times and marginal cost. New brine projects take many years and hard-rock mines several; lepidolite and African spodumene set the marginal cost that floors prices in a glut.
• Resource nationalism. Chile's state partnership model and Zimbabwe's raw-ore export ban (2022) change who controls supply and at what cost.
• Chemistry and substitution. Sodium-ion cells and LFP versus NMC shifts change how much lithium each kWh needs.

Metrics to track