China's lithium market is expected to experience a prolonged overcapacity over 2025-2027 until the market resumes supply-demand balance amidst the gradual phase-out of high-cost capacities, suggested by Mysteel at the MMLC 2025 (3rd) Lithium Conference held in Xining, Qinghai Province over June 23 – 25, 2025.
The overcapacity has kept the market competition intensive, and the refineries' fabrication charges are closing to the break-even point, which is expected to slightly accelerate the capacity phase-out. Nevertheless, the lithium carbonate futures contract has helped some refineries to survive by creating hedging opportunities, allowing certain profitability.
With the lithium demand far from its ceiling as is believed by the market players, the market players have prioritized cost control to live through the hard time before the demand picks up substantially.
Among the technology routes, lithium brine is believed to enjoy the lowest cost, in addition to other benefits like environmental friendliness and valuable by-products. In China, the lithium extraction technologies have experienced rapid development, which starts with the absorption system.
The absorption system, boasting a production cost of as low as Yuan 25,000 tonnes/year, is with a construction period of less than 10 months, and more than 50% of the constructing DLE (direct lithium extraction) capacity adopts the absorption system, according to data from a DLE solution provider which spoke at the Conference. Thanks to the development of adsorbents, the absorption system shows better tolerance for feedstock with the lowest density of 40 mg/L, and the lithium recovery rate is above 80%.
Higher requirement for lithium recovery rate and lithium carbonate purity has led to the creation of adsorption and membrane coupling process, which later incorporates new processes including solvent extraction, electrodialysis, and electrochemistry to further enhance the lithium recovery.
Looking back on 2025, the global electric vehicle market will maintain momentum despite potential trade conflicts, while the annual growth rate is anticipated to slow down to 20% with an expected annual sales volume of 22 million vehicles. Among them, China will consistently rank as the largest consuming market with an estimated share of 72%, Mysteel's analysis showed.
China's energy storage market is likely to keep expanding in 2025, with the annual shipment estimated to hit 350 GWh, up 20-30% from 2024. In 2024, data showed that the global energy storage battery shipment totaled 314.7 GWh, rising 60% from the previous year, of which 267 GWh was contributed by China.
Written by Aggie Hu, huchenying@mysteel.com
