The lithium sector is undergoing a phase of adjustment, marked by supply realignments, demand shifts and pressure on operating costs, within a context of increased price volatility and a redefinition of the global balance.
In conversation with Panorama Minero, Pedro Consoli, LATAM Metals Market Reporter at Argus, analyzed the key factors driving current market dynamics, while also providing insight into the recent launch of a FOB Argentina price for 99.5% battery-grade lithium carbonate, the first of its kind in Latin America within Argus’ pricing system.
By Panorama Minero
What factors are currently shaping the lithium market, and how does Argus view the sector’s evolving landscape? How is Argentina and the region positioned in this context?
At present, three main factors are shaping the lithium market: supply disruptions, geopolitical tensions in the Middle East, and the rapid growth of energy storage systems (ESS), which rely on lithium-ion batteries to store renewable energy.
ESS demand became a relevant component in 2025 and, by year-end, emerged as one of the primary drivers of lithium consumption. Stronger-than-expected growth in this segment pushed lithium carbonate prices to a 16-month high in November, a trend that continues as ESS expansion outpaces that of electric vehicles.
Prices rose again in February following Zimbabwe’s ban on lithium exports, a measure that removed approximately 140,000 metric tonnes of lithium carbonate equivalent from the market. This decision disrupted supply chains, particularly for Chinese producers reliant on African spodumene for lithium carbonate and hydroxide production.
At the same time, the market reflects the impact of the conflict between the United States/Israel and Iran. Beyond general uncertainty, the situation has affected key shipping routes and slowed activity in Saudi Arabia and the United Arab Emirates, both relevant buyers of Chinese ESS. It has also impacted the supply of sulfuric acid, a key input in spodumene conversion.
Even so, the supply adjustment linked to Zimbabwe is considered to have a more structural impact than current geopolitical disruptions.
In this context, Argentina is positioned to capture part of the supply shortfall, particularly for Chinese manufacturers seeking alternative sources of raw materials. This is reinforced by a key differentiator: brine-based production, which is less dependent on sulfuric acid compared to hard-rock operations.
However, rising fuel costs and maritime freight rates are placing pressure on margins, even in a higher price environment.
A similar dynamic is observed across the region. Chile maintains its position in brine production, while Brazil, which does not process spodumene domestically, remains less exposed to disruptions in sulfuric acid supply.
Overall, Latin American producers have available capacity to supply the market in 2026, with uncommitted volumes that could help ease supply deficits.
Nevertheless, the lithium market remains exposed to volatility as long as tensions in the Middle East persist. Argus expects price fluctuations throughout the year, with levels likely to remain closer to current prices than to the lows recorded in 2025.
Lithium carbonate prices in China have tripled from their 2025 lows. Are there structural drivers behind this recovery? How do you assess this situation?
Yes, the fundamentals behind the increase are solid.
The lithium market has historically shown strong sensitivity to supply and demand dynamics, and the current environment is no exception. Following the historic low recorded in June 2025, prices began to recover more strongly in early August, when the Chinese government ordered CATL, the world’s largest battery manufacturer, to shut down its main Jianxiawo mine, abruptly removing 46,000 metric tonnes per year of lithium carbonate equivalent from the market.
This supply shock destabilized the market, which entered its traditional peak demand season in September. By November, ESS had consolidated as a core demand driver, reinforcing the upward price trend and strengthening buying activity.
ESS remained the main driver through January and February. Subsequently, Zimbabwe imposed its export ban, and combined with further delays in restarting operations at Jianxiawo, this added renewed upward pressure on prices.
The conflict between the United States/Israel and Iran is now introducing downward pressure, partially moderating price increases amid broader uncertainty across commodity markets. However, the rise in lithium compound prices is also supported by physical market conditions, rather than speculative factors alone.
The global market was dominated in 2023 and 2024 by oversupply from China, which pushed prices below production costs for most operators. Is that cycle coming to an end? What does the global cost curve indicate about producer viability at current price levels?
The “pure surplus” narrative for 2023–2024 is losing momentum, at least in the short term. Zimbabwe’s ban on lithium exports alone removed approximately 140,000 tonnes per year of lithium carbonate equivalent from global supply, offsetting a significant portion of the surplus in the near term.
However, as projects ramp up production across South America, Australia and China, they are expected to partially replace Zimbabwe’s absence. Under this scenario, supply would tend to realign with demand while the African producer remains out of the market, although a shortage is not anticipated in the short term.
Current price levels are supportive for lithium producers, but more challenging for battery manufacturers. At these levels, low-cost producers remain viable, particularly those that sustained profitability during the 2025 price lows. In this context, South American producers remain competitive, generally positioned in the mid-to-lower segment of the global cost curve.
That said, current prices are beginning to put pressure on margins for lithium processing plants and cathode material producers.
Lithium prices have increased faster than those of cathodes and battery cells, compressing margins for conversion plants and cathode manufacturers. At the same time, processing facilities are facing higher input costs, including sulfur and sulfuric acid.
In January, several Chinese cathode producers idled part of their capacity in order to protect margins.
At the local level, official projections place Argentina’s lithium production at around 418,000 tonnes by 2030 and over 650,000 tonnes by 2035, potentially challenging Chile’s leadership. Are these figures aligned with Argus’ view, or are there bottlenecks that could affect their realization?
Argentina’s projections are ambitious and sit at the upper end of industry estimates, although the country has clear potential to become one of the world’s top three lithium producers in the short to medium term.
The main bottlenecks identified are logistics and infrastructure. Supplying inputs to operations and transporting lithium to ports entails high costs, placing Argentina above Chile in terms of operating cost structures.
Producers may pay up to US$300 per tonne to transport lithium salts from plant to port, with some projects located as far as 1,800 km from export terminals.
This is compounded by the location of several projects in remote areas, where electricity and water availability are limited. In some cases, mining companies must develop their own infrastructure, further increasing capital and operating costs.
In this context, some operating and pipeline projects could face challenges if prices return to 2025 levels.
A growing share of future developments incorporates direct lithium extraction (DLE) technologies or hybrid DLE-evaporation schemes. While these technologies are still scaling up, they are not currently viewed as a decisive constraint in the short term.
The political and financial environment is no longer a structural bottleneck, although questions remain regarding long-term regulatory stability. Even so, the current policy framework is acting as a supportive factor for the sector.
Lithium prices remain a key variable in project viability. At current levels, financing and development are more achievable; however, in a lower price environment, Argentine projects face greater challenges due to their cost structure.
As a reference point, Rio Tinto plans to more than triple its lithium production by 2028, while Posco delayed the completion of its Argentine projects by approximately six months following a slower-than-expected price recovery in 2025.
In terms of output, Argentina could approach Chile’s production levels by 2030. However, in subsequent years, the start-up of new assets in Chile and planned capacity expansions could widen the gap once again.
How does Argentina’s lithium market structurally differ from others in the region, and what are the implications for price formation?
Each market has its own characteristics. In Argentina’s case, brine composition differs from that of Chile and Bolivia, while Brazil produces lithium from hard rock, resulting in a different product profile.
Argentina accounts for the largest number of active lithium projects in South America and a broader diversity of operators, which translates into a more heterogeneous supply base. Each producer delivers different product grades, with variations in purity and impurity levels, although most lithium carbonate projects operate at or target battery-grade specifications.
This directly affects price formation, as each grade trades at specific premiums or discounts. In addition, the country produces different lithium compounds, primarily carbonate and hydroxide, each with its own pricing references.
From a commercial standpoint, China remains the main export destination, meaning that Argentine lithium prices tend to align with Chinese benchmark indices.
Beyond geological differences, logistics is another key structural factor. While Chilean projects are relatively close to ports, Argentine operations can be located as far as 1,800 km away, in a context of more limited transport infrastructure. This impacts costs and, ultimately, product competitiveness.
On the regulatory front, Chile maintains a more restrictive framework with longer approval timelines, while Argentina treats lithium under the general mining regime. Although this difference does not directly affect price formation, it does influence development timelines and supply dynamics in the medium term.
Argus has launched a FOB Argentina price for 99.5% battery-grade lithium carbonate, the first of its kind in Latin America within its pricing portfolio. Why now? What level of market maturity made this possible?
Lithium is a rapidly evolving market, with Argentina among the most dynamic in the region. This creates a natural case for greater price transparency and visibility, and highlights opportunities for market development.
For any price launch, Argus assesses multiple factors before proceeding. These include compliance with IOSCO principles for price reporting agencies, data availability, the usefulness of the reference, and the level of market interest.
Given that Argentina’s lithium spot market is still developing, the assessment required a more flexible approach, incorporating the Chinese market, which is more liquid, as a reference point. This methodology will continue to be monitored as the market evolves.
Ultimately, the launch was driven by demand from local participants and related stakeholders, and following a detailed evaluation of the challenges, Argus moved forward with the development of the index.
Argentine lithium is not a homogeneous product, and specification differences between projects result in price differentials. How does the index capture this diversity? Does a single “99.5% battery-grade” value reflect market reality?
Argentina does produce different product grades, although most lithium carbonate producers operate within similar specification ranges. As with most traded commodities, lithium is not homogeneous and is governed by industrial standards that allow for acceptable quality ranges.
In this context, Argus assesses prices using defined tolerances and high-low ranges. Transactions, bids, offers and other market inputs are subject to verification processes, which may include data normalization or exclusion from the final assessment.
Restricting the sample to a single product type or producer would introduce risks of distortion and reduce the liquidity required to build a reliable price reference. It could also compromise source confidentiality, affecting the sustainability of market reporting.
For this reason, Argus works closely with market participants to define methodologies that are regularly reviewed and updated, and recommends that contracts include specific terms reflecting product characteristics or transaction requirements, within existing agreements or in response to changes in market dynamics.
