Lithium carbonate prices on the Wuxi exchange settled at 89,200 yuan per ton Friday, marking a 41% rebound from the cycle low set in January as China's expanded electric vehicle trade-in subsidy program drove March passenger EV sales to a record 3.4 million units, up 38% year-over-year. The recovery has lifted lithium equities sharply, with Albemarle gaining 32% year-to-date and Chile's SQM rising 28%.
The bounce comes after a brutal two-year price collapse that saw lithium carbonate fall from a peak above 600,000 yuan in late 2022 to barely 63,000 yuan in January, prompting widespread mine closures, project deferrals and a wave of impairment charges across the global supply base. Chinese, Australian and African producers all idled high-cost capacity through the trough.
Supply Discipline Meets Demand Recovery
The supply response has been more disciplined than during prior commodity cycles. Pilbara Minerals deferred its P2000 expansion in Western Australia, Liontown delayed Kathleen Valley ramp targets, and several West African projects pushed first production into 2027. CATL closed two of its eight Chinese spodumene processing lines to support pricing.
On the demand side, the Chinese EV trade-in program has been the dominant catalyst. Beijing extended the subsidy through year-end last month and raised the per-vehicle benefit to 20,000 yuan for buyers replacing internal combustion vehicles older than ten years. The combined fiscal stimulus is estimated at 280 billion yuan and has restored Chinese consumer EV demand to growth rates not seen since 2022.
Implications for U.S. Battery Supply Chain
For the U.S. battery supply chain, the price recovery is double-edged. Higher lithium costs flow through to battery cell pricing and ultimately to EV affordability, complicating the Inflation Reduction Act's domestic content goals. However, higher prices also justify the capital intensity of building U.S. and Canadian processing infrastructure, with several deferred projects now restarting.
Albemarle CEO Kent Masters told analysts at a Goldman Sachs energy conference Wednesday that the company's Kemerton expansion in Western Australia would proceed at full pace, while the Kings Mountain restart in North Carolina will be evaluated for an accelerated 2027 commissioning. Tesla, Ford, and GM have all renegotiated multi-year offtake agreements at higher floor prices, lending stability to producer cash flows.