10:53 AM EDT, 07/11/2024 (MT Newswires) -- A sustained recovery in lithium prices remains unlikely until overcapacity in the lithium battery supply chain is reversed, ANZ Bank said in a Wednesday note. ANZ noted that the market is set to rebalance following a "strong supply response" to the recent collapse in prices.

According to ANZ, lithium producers have been applying fiscal discipline while high-cost miners and processors are expected to exit the market. Other producers will either reduce or defer investments. Due to these factors, supply adjustments are likely, ANZ said.

ANZ added that lithium supplies are concentrated in a small number of countries including Australia and Chile, which dominate the upstream markets, while China controls 70% of the downstream market.

This makes lithium and battery supplies vulnerable to country-specific risks, ANZ said.

"Demand for lithium to support the electrification of the transport sector remains strong," ANZ said. "We see demand for lithium and lithium-ion batteries growing 17-18% annually through 2030."

ANZ expects lithium prices to rise to US$16,000-US$18,000 by 2025.