The European lithium hydroxide market continued to experience a decline in December 2024, primarily driven by cheaper imports and subdued demand from battery manufacturers and electric vehicle (EV) makers. This downward trend of lithium hydroxide reflects a challenging market landscape marked by oversupply and cautious market sentiment.

The European lithium hydroxide market continues to grapple with a challenging landscape. While Chile maintains its position as a leading producer, robust supply has led to a global oversupply, exerting significant downward pressure on the prices of lithium hydroxide. This oversupply, coupled with cautious market sentiment stemming from tightening regulations in key markets like the US and EU, as well as declining EV sales, has significantly dampened demand. However, industry players anticipate a gradual price stabilization in the mid-term as market dynamics adjust and the industry adapts to the evolving regulatory environment.

The price drop in December reflects a continuation of the downward trend observed in the European lithium hydroxide market. This decline can be attributed to several factors, including increased imports of cheaper lithium hydroxide from competing regions, and a slowdown in demand from key consumers such as battery manufacturers and automotive companies. This slowdown in demand for lithium hydroxide can also be attributed to economic uncertainty and concerns about the overall economic outlook.

Cautious spending by battery manufacturers and EV makers, particularly amid tightening regulations in major markets, has significantly impacted demand for lithium hydroxide. These regulations, which aim to promote sustainable and responsible sourcing of raw materials, have created uncertainty and increased costs for manufacturers, leading to a more cautious approach to investment and production.

Chile continues to dominate global lithium carbonate and lithium hydroxide production with strong output. However, this robust supply, while beneficial for meeting growing global demand in the long term, has created an oversupply situation in the short term, exerting significant downward pressure on prices. Companies, despite achieving record-high sales volumes, have experienced revenue declines due to plummeting prices, highlighting the challenges faced by producers in the current market environment.

The short-term outlook for the European lithium market remains clouded by several challenges. These include continued oversupply, declining EV sales in key markets, and manufacturers' reluctance to expand operations due to price concerns and the uncertain regulatory landscape.

Industry experts anticipate a gradual stabilization of lithium hydroxide prices in the mid-term, likely around mid-2025. This stabilization is expected to occur as supply chains adjust to market realities, demand from the EV sector continues to grow, and the industry navigates the evolving regulatory environment. This stabilization will be crucial for ensuring the long-term sustainability and growth of the lithium industry, while also supporting the transition to a more sustainable and electrified transportation sector.