The battery metals sector faces a brutal paradox where everyone knows long-term demand is massive, but right now oversupply crushes prices across the lithium, nickel, and graphite markets.
The implications ripple through every link in the energy transition chain, from mining operations to recycling facilities, as producers grapple with immediate losses against future potential.
ANZ research says sentiment has been battered, with policy shifts dimming the outlook for EV adoption.
“Combined with more cost-conscious consumers, this has seen global EV manufacturers pull back on lofty targets,” ANZ wrote.
"A price war in China, the world’s biggest EV market, has also exacerbated the situation for the battery metal markets.
“Major producers have reacted by limiting supply growth to address oversupply of lithium, cobalt and nickel.”
Lithium: the reckoning
Lithium prices have flatlined after an 80% plunge from 2022 peaks, with lithium carbonate trading at 64,650 CNY per tonne (t) on July 14 - posting a modest 1.41% daily gain but remaining down 26.95% year-to-date.
The math spells oversupply: 154,000t of surplus in 2024, shrinking to 10,000t this year, before flipping to deficit in 2026.
Chile cranked up output 22.8% in early 2025, while new projects in Mali and Argentina added nearly 58,000t to global coffers.
But low prices are forcing reality checks everywhere, with Albemarle slashing 2025 capex by $100 million and delaying expansions in Australia and China, while Nevada mines face similar postponements.
The real problem lies in China's 64% hegemony over refining capacity and its willingness to impose export restrictions on Western buyers.
Find out more: Mission Critical: Why China can keep weaponising rare earths
Meanwhile, EV demand (17 million units expected globally in 2025) is being offset by slower post-Lunar New Year growth in China and the shift towards cobalt-free LFP batteries.
Nickel: Indonesia's flood
Nickel hit 15,030.75 USD per tonne on July 15, down 0.29% daily and 9.42% over the past year, with five-year lows telling the story of sustained weakness.
Indonesia produced 2.2Mt in 2024 - over half of global supply - with a projected 17% increase this year creating a 253,000t surplus - up from 209,000t in 2023.
Export bans force domestic processing, concentrating on refining in Indonesia and China while stainless steel still takes 64% of demand and EV batteries consume 15%.
High-purity nickel sulphate trades around US$3,770/t but U.S.-China trade tensions add 10% tariffs to the mix as one analyst noted: supply continues to outpace demand, with little rebound in sight.
Graphite: China's grip tightens
And spherical graphite (99.95%, 15-17 microns) fell 3.9% quarter-on-quarter to US$691/t FOB China in March, while U.S. prices dropped 5.5% to US$912/t as weakness continues across the market.
China controls 70% of natural graphite production and 90% of refining, with export restrictions since December 2023 tightening global access and spurring African output in Mozambique and Madagascar.
Synthetic graphite hit 3Mt in 2024, offering an alternative at higher costs as EVs drive demand - ~30% of global vehicle sales in 2025 - but North America faces a 200,000t annual deficit.
The U.S. Department of Defense threw $37.5 million at Graphite One for domestic processing as Washington seeks to reduce dependence on Chinese supply chains.
The ol’ value chain shuffle
Lithium's growing recycling industry could satisfy 15% of demand by 2030, while direct lithium extraction and sodium-ion batteries are disrupting traditional flows as the U.S. Inflation Reduction Act funnels $30 billion into localisation efforts.
Nationalism and trade barriers pose risks to resources, but the sector needs >300 new mines by 2035, as vertical integration emerges as the hedge against volatility.
Surpluses are depressing markets this year, but tightening looks likely by 2026 as EV and renewables growth will eventually overwhelm current oversupply levels.
The sector's survival depends on diversifying away from China and embracing sustainable practices, with the energy transition needing these metals regardless of short-term price pressures.
The question is whether the industry can navigate the geopolitical maze to deliver them when the market inevitably tightens again.
