Not long ago, lithium was stuck in a slump. Prices had crashed, supply was overflowing, and producers were quietly pulling back after a painful stretch of losses. Now, the mood has flipped.
According to Traxys, one of the world’s largest lithium traders, the market is moving out of surplus and into shortage territory, and it’s happening faster than many expected.
“We’re seeing very strong demand coming out of Asia,” said Martim Facada, Managing Director for Lithium Trading at Traxys. “Right now, the market is under-supplied. And it looks like this trend still has room to run.”
China Is Doing the Heavy Lifting
At the heart of the rebound is China. Electric vehicle adoption there continues to accelerate, and it’s starting to reshape the global lithium balance once again.
Facada expects EV penetration in China to reach between 60% and 70% this year, up from just over 50% today. That jump alone represents a massive increase in lithium consumption.
And it’s not just about cars anymore.
Large-scale battery storage projects the kind that stabilize power grids and support renewable energy, are becoming a serious demand driver. As countries push for cleaner energy systems, lithium is increasingly doing double duty: powering vehicles and balancing electricity networks.
From Oversupply to Tight Markets
The turnaround comes after a rough period for the industry. When lithium prices hit record highs in 2022, producers rushed to expand supply. But demand didn’t keep pace, and the market quickly flipped into oversupply.
Prices collapsed. Projects were paused. Capital dried up.
“A lot of money was lost across the supply chain,” Facada admitted. “Now we’re finally turning the corner.”
That pause in investment is now coming back to bite. Many of the projects that were shelved will take years to restart, meaning supply can’t respond quickly to today’s rising demand.
Prices Are Rising, But Still Have Room
Lithium prices in China have already more than doubled from last year’s lows. Even so, they remain more than 70% below the peak seen in late 2022.
That gap is important. It suggests the current rally isn’t just speculative noise, it’s a structural recovery driven by real demand.
Traxys Bets on the Long Game
Traxys is already positioning itself for what comes next. The company recently signed a deal to buy lithium from Lilac Solutions’ Great Salt Lake project in Utah, which is expected to begin production in early 2028.
The trading house may also invest directly in the project, contributing to the roughly $300 million Lilac is aiming to raise. The lithium produced there will be sold domestically in the US.
Lilac CEO Raef Sully summed it up clearly: even though US EV subsidies have slowed and domestic EV growth isn’t as aggressive as before, global demand tells a different story.
“The outlook for lithium and batteries remains very strong,” he said.
And judging by how quickly the market has flipped from glut to scarcity, the lithium story is far from over, it’s just entering its next phase.
