Lithium prices rose more than 400% in 2021; supply agreements failed to keep up

Why the most common lithium pricing mechanisms don't serve the strategic aims of the EV market

Lithium prices shot up by more than 400% in 2021, but producers’ profits didn’t follow the same trajectory. Instead, the vast majority of producers found themselves locked into long-term, fixed-price supply agreements, at prices as low as 300% below spot market rates.

A more sophisticated pricing mechanism is required to ensure the lithium market can attract the investment it needs to meet surging EV demand.

Lithium supply negotiations have not kept up with market conditions

What to read next
Read Fastmarkets' monthly battery raw materials market update for May 2025, focusing on raw materials including lithium, cobalt, nickel, graphite and more
To increase transparency, Fastmarkets has further clarified how it handles price movements during periods of low liquidity. Factors that Fastmarkets may consider during times of low liquidity include, but are not limited to: market fundamentals such as changes in inventory levels, shipments, operating rates and export volumes; relative fundamentals of similar commodities in the same […]
Cobalt Holdings plans to acquire 6,000 tonnes of cobalt. Following their $230M London Stock Exchange listing, this move secures a key cobalt reserve. With the DRC’s export ban affecting prices, the decision reflects shifting industry dynamics
The recent US-China agreement to temporarily reduce tariffs is a major step for global trade, with tariffs on US goods entering China dropping from 125% to 10% and on Chinese goods entering the US decreasing from 145% to 30% starting May 14. While this has boosted markets and created optimism, key industries like autos and steel remain affected, leaving businesses waiting for clearer long-term trade policies.
The US-China trade truce announced on May 12 has brought cautious optimism to China’s non-ferrous metals markets, signaling a possible shift in global trade. Starting May 14, the removal of additional tariffs has impacted sectors like battery raw materials, minor metals and base metals such as zinc and nickel, with mixed reactions. While the improved sentiment has lifted futures prices and trade activity, the long-term effects remain unclear due to challenges like supply-demand pressures and export controls.
Under the proposal, less-frequent price assessments that fall on Chinese public holidays will be published on the nearest working day. The prices are being skipped according to the currently pricing holiday schedule. Fortnightly and monthly prices that fall on Chinese public holidays will be assessed and published on the closest working day in the same […]