The lithium carbonate price has surged 25% in 2025 and now sits at an 18-month high of US$13,292 per tonne.
The commodity's rebound began in June amid higher demand for lithium to power battery infrastructure and electric vehicles (EVs).
Major global lithium producer Ganfeng expects lithium demand to grow by 30% in the new year.
Meantime, China is implementing supportive measures for the EV industry, which will boost lithium demand.
Analysts at Trading Economics said:
Top lithium consumer China stated it would double EV charging capacity to 180 gigawatts by 2027, supporting lithium-rich energy storage systems with compensation mechanisms for power storage infrastructure.
Also, output of new energy vehicles in China rose by 33.1% in the first ten months of the year, with October sales reflecting 51.6% of the market share, the first majority for new energy vehicles on record.
Other lithium prices are also higher.
The Spodumene Concentrate Index (CIF China) Price has ripped 26% in a month to US$1,162 per tonne.
The Battery-Grade Lithium Hydroxide price is also up about 9.5% in a month to US$10,300.32 per tonne.
China is also enacting anti-involution initiatives to constrain the output of critical minerals like lithium to preserve current price levels.
Broker recommendations on ASX lithium shares
Higher lithium prices have provided a tailwind for ASX lithium shares, many of which have recently hit new 52-week highs.
Today, the Pilbara Minerals Ltd (ASX: PLS) share price is $3.82, up 2.3% on Friday and up 184% since 1 July.
The market's largest pure-play ASX lithium share hit a 52-week high of $4.26 last month.
Last month, Citi reiterated its hold rating on Pilbara Minerals shares with a 12-month price target of $3.25.
Morgans says this ASX lithium share is a sell with a price target of $3.10.
IGO Ltd (ASX: IGO) shares are $6.91, up 7% on Friday and up 66% since 1 July.
The nickel and lithium producer reached a 52-week high of $7.35 per share last month.
Macquarie put a buy rating on IGO shares this week with a price target of $5.75.
Citi has a hold rating with a price target of $5.60.
Morgan Stanley has a sell rating on this ASX lithium share with a target of $4.50.
The Liontown Ltd (ASX: LTR) share price is $1.33, up 5.6% today and up 90% since 1 July.
Liontown shares hit a 52-week high of $1.61 last month.
Last week, Macquarie put a sell rating on Liontown with a price target of 65 cents.
Citi also has a sell rating with a target of 50 cents.
Outlook for lithium prices
Jacob White from Sprott Asset Management said lithium sentiment turned bullish this year following three years of decline.
Now, expectations of stronger demand outside the US mean global oversupply may be absorbed sooner than anticipated.
In an article this week, White said:
This rebound is being driven by robust demand growth and ongoing inventory reduction, alongside regulatory tightening, including the shutdown of a major Chinese lithium mine by Contemporary Amperex Technology Co. Ltd. (CATL) and new government measures aimed at preventing producers from selling lithium at unsustainably low prices.
The increased recognition of lithium as a critical mineral, combined with Western concerns over China's control of global supply chains, is bolstering the sector outside of China.
These combined forces are reshaping the global lithium landscape and providing support to prices.
White said Sprott Investment had a positive outlook on lithium prices.
As supply adjustments take hold and global EV demand remains relatively strong, our outlook on lithium remains positive.
We believe price stabilization, industry consolidation and continued government stimulus measures in China should support long-term growth prospects even as shifting U.S. policies create uncertainty.
White points out that lithium batteries are increasingly being used in data centres that are powering the artificial intelligence revolution.
He said:
Given that the electricity demand of global data centers is projected to rise 2.5 times by 2030, there is significant room for growth.
Google is using more than 100 million lithium-ion cells in its data centres worldwide.
