Benchmark expects lithium demand to increase by 32% this year, compared to 2023. However, increases in production by industry majors as well as new supply means the market is set to be in a small surplus of around 8,000 tonnes this year, Benchmark forecasts.

Arcadium Lithium said it would increase lithium carbonate and lithium hydroxide volumes by around 40% in 2024 to between 50,000 to 54,000 tonnes LCE.

Outside of China, so far the largest market casualty of lower lithium prices has been non-integrated spodumene production such as Australia’s Core Lithium, which said in January it would suspend mining operations at its Finniss lithium project in the Northern Territory and process stockpiles instead. Its estimated output was set to be 11,000 tonnes LCE this year.

Benchmark currently forecasts the lithium market will be balanced until 2029, when it will enter a deficit.

Lower lithium prices could help push demand higher, however, if it leads to lower battery prices, Benchmark notes.

Prices for lithium iron phosphate (LFP) battery cells have fallen by 20% over the past year to an average of $73.6 per kWh, according to Benchmark’s Lithium Ion Battery Cell Price Assessment.

China’s BYD has already started to cut prices for more models this year, a trend that is being followed by others across the industry. China’s largest battery producer CATL said last month that the new energy industry “maintains a rapid growth rate.”

Tier 1 battery producers are also increasing production this month, according to Benchmark.

If the low prices continue it will be hard to meet the demand for lithium as we forecast there will be a deficit late in the decade. A persistent low price environment could challenge this supply and tip the market towards a deficit sooner.

—Sophia Jang, an analyst at Benchmark

Battery-grade lithium carbonate in China has now risen by 13% year-to-date to trade at an average price of RMB 110,250 ($15,325) a tonne.

Yet while sentiment has turned positive, due to a rebound in battery production following the end of China’s Spring Festival and environmental inspections in Jiangxi province, it remains to be seen whether demand in the near-term will be strong enough to support a significant rise in prices, according to Benchmark.