As the battery industry’s demand dynamics shift, buyers and sellers of lithium are engaged in crucial annual supply discussions for 2025. Producers are aiming to secure better terms following a challenging year for this essential battery component. More details on this ongoing negotiation can be found here.

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Although lithium prices are on track for a second consecutive yearly decline, the steep reduction experienced earlier seems to have reached its nadir. IndexBox data reveals that the export value of lithium carbonate from China stands at USD 518.3 million in 2023, while imports significantly outweigh exports at USD 6.3 billion.

The ongoing negotiations, which involve major customers from the cathode, battery, and electric vehicle sectors, are being driven by a desire to limit the discounts previously extended to battery supply-chain customers. This strategic pivot seeks to align with the modest improvement anticipated in market conditions over the coming year. Current deals are being debated at discounts ranging from zero to 2% off a spot price index, a stark change from previous reductions of 5% to 10%.

China remains a pivotal market player, accounting for the largest portion of global lithium consumption. The top export destinations for Chinese lithium carbonate include South Korea (USD 273.8 million), Japan (USD 161.3 million), and Germany (USD 32.2 million). Conversely, China predominantly imports lithium carbonate from Chile (USD 5.8 billion) and Argentina (USD 478.6 million), illustrating its crucial role in the global supply chain.

This negotiation phase marks a significant shift from the fixed-price contracts of the past, as the sector adapts to the volatility synonymous with the EV era. Battery manufacturers now navigate fluctuating prices using annual agreements, paralleling practices seen in metals like copper, and leveraging terms that include premiums or discounts relative to third-party spot price indices.

Source: IndexBox Market Intelligence Platform