US lithium steadier than Asian spot

Argus launched in July three new US lithium prices as a still gradually growing US market struggles in a relatively low-price environment dominated by long-term agreements (LTA).

The US battery market remains smaller and less active compared to its European and Asian counterparts. Transactions in the US continue to be priced under legacy long-term contract agreements, limiting exposure to short-term volatility.

These long-term agreements (LTAs) were signed between 2-5 years ago, often with floor price clauses designed to protect producers during market downturns. As spot market lithium prices declined sharply over the past year, these LTAs have since triggered those price floors.

The contract floors are roughly $16/kg on average for lithium carbonate equivalent, sources said, which was backed up by estimated volumes and projected sales revenues across various pricing scenarios provided by integrated specialty chemicals producer Albemarle in its second quarter presentation.

The newly launched US lithium prices held steady since their debut, reflecting a market shaped by long-term, structural fundamentals rather than short-term noises.

Argus assessments how US battery-grade lithium carbonate held at $9.00–10.00/kg in its second assessment on 5 August, while technical-grade sat slightly lower at $8.50–9.50/kg. Lithium hydroxides were priced at $9.50–10.50/kg.

This development has offered a degree of margin protection for some suppliers. But the benefits are uneven — companies with older, higher floor prices are in a stronger position than those with more recent or flexible terms.

Albemarle expects earnings before interest, taxes, depreciation, and amortization (EBITDA) margin on lithium sales in the mid-20pc range, despite paying royalties of up to 40pc on its Chilean lithium brine.

Price floors are designed to hedge risks, ensure operational stability, and provide automakers with the supply security and reliability they prioritize.

Vertical integration moderates upside

US battery manufacturing capacity has more than doubled since 2022, surpassing 200GWh in 2024, with another 700GWh under construction. Stationary battery demand — although smaller than EV demand — has grown over 60pc/yr for two years, driven increasingly by data center backup and grid support, according to report by the International Energy Agency.

Utility-scale battery storage is set to surge from 27GW at the end of 2024 to nearly 65 GW by the end of 2026, more than doubling in two years.

In tandem with this development, US consumption of battery-grade lithium chemicals is slated to grow as new cathode active material (CAM) plants near completion.

Tesla remains on track to begin cathode production this year, while South Korean battery material producers such as Posco Future M and LG Chem are expected to start production next year.

Tesla plans onshore production of critical battery materials to the US and begin domestic production of its first lithium iron phosphate cells later this year.

General Motors and Posco Future M partners in 2022 to build Ultium CAM in Quebec that will produce 30,000 metric tonnes (t)/yr of CAM, with production anticipated in early 2026.

LG Chem is building a $3bn cathode factory in Tennessee to supply GM more than 500,000t of CAM between 2026 to 2035.

In November 2024, LG Chem in turn secured a supply agreement with ExxonMobil for up to 100,000t of lithium carbonate.

Although Albemarle’s Silver Peak brine mine in Nevada is currently the only domestic lithium operation, up to 10 greenfield projects are expected to come online starting in 2027, supported by federal funding and the operators’ own capital.

These projects include Lithium Americas’ Thacker Pass and Ioneer’s Rhyolite Ridge clay resources in Nevada. Additionally, ExxonMobil, Standard Lithium/Equinor, EnergyX, and Chevron are developing oilfield brine projects in the Smackover Formation, Arkansas.

Further FAST-41 listed projects include Jindalee Resources’ McDermitt project in Oregon and Controlled Thermal Resources’ Hell’s Kitchen project in California.

Vertical integration across the US battery supply chain reduces the likelihood of supply shocks reaching end users and helps dampen the impact of peak price spikes.

Still, US president Donald Trump's sweeping new legislation, the One Big Beautiful Bill Act (OBBBA), will likely stall the country's electric vehicle (EV) transition and potentially undermine the push to domesticate raw materials production for batteries.

Filtering noise in the Asian spot market

In contrast, Asian spot markets have been increasingly volatile since late June, driven by an amplified reaction to policy and supply shifts.

China in early July vowed to curb low pricing and "rat race" competition among industrial producers and promote a gradual phase-out of dated capacity, which has supported lithium prices and market sentiment.

The Yichun government asked eight major lepidolite mining firms to submit reports on reserves verification by 30 September. This may disrupt production at some mines with incomplete procedures, according to market participants. Battery manufacturer CATL suspended mining and dressing operations at its Jianxiawo lithium lepidolite mine in Yichun city in southeast China's Jiangxi province after the mine's licence expired on 9 August.

These factors have triggered sharp movements in Chinese domestic prices, but fundamentally remains in a surplus.

Spot and futures traders responded to shifting headlines, with limited increases in restocking from actual buyers. A flurry of auctions and bidding events provided opportunities for undisclosed counterparties to transact at higher prices, with these prices reported to price agencies, reinforcing a cycle of rising prices.

The US and European markets have not mirrored these fluctuations. Cathode producers are showing little urgency to follow the rising spot prices in Asia, some claims have been offered materials at “deep discounts.”

The divergence underscores structural differences between the two markets. Asian spot prices remain sensitive to sentiments, while US pricing is anchored in contractual stability and real demand fundamentals.

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Author name: Carol Luk, Senior Reporter, Metals