Supply-Demand Models for Critical Minerals
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A supply-demand model for a critical mineral estimates, year by year, how much will be produced and recycled against how much end users will consume, and reads the gap as a signal for prices and investment. The inputs are demand drivers such as vehicle sales and battery size, supply from existing mines and planned projects, and policy variables such as export quotas. In 2025 lithium production outside the United States rose about 31% to roughly 290,000 t while consumption was an estimated 263,000 t, a surplus of about 27,000 t of lithium, which kept prices low in the first half of the year.
+27,000 t
lithium production minus consumption in 2025, excluding US output (290,000 t against 263,000 t)
189,000 t
estimated global primary nickel surplus in the first nine months of 2025
23 million
electric car sales the IEA expects in 2026, close to 30% of new cars, after more than 20 million in 2025
Source: IEA Global EV Outlook 2026
42%
DRC cobalt export quota for 2026 (96,600 t) as a share of its 2025 mine output (230,000 t)
How does a supply-demand balance work, in a real example?
A balance subtracts consumption from supply in the same unit and year. The table works one for lithium from the US Geological Survey's 2026 summary, converting lithium content to lithium carbonate equivalent (LCE) by multiplying by 5.323, the ratio of the molar mass of lithium carbonate to the lithium it contains. The figures exclude US production, which the USGS withholds.
| Year | Production, lithium content | Consumption, lithium content | Balance, lithium content | LCE: production / consumption / balance |
|---|---|---|---|---|
| 2024 | 222,000 | 220,000 | +2,000 | 1,181,706 / 1,171,060 / +10,646 |
| 2025 | 290,000 | 263,000 | +27,000 | 1,543,670 / 1,399,949 / +143,721 |
Source: USGS Mineral Commodity Summaries 2026, lithium. LCE conversion calculated by this site. In 2025 spot lithium carbonate in China rose from about $9,300 to about $10,300 per tonne and the average US contract price was $9,000 per tonne, down 31% from 2024.
The balance explains the price path the USGS describes: concern about oversupply kept prices low in the first half of 2025, and strong electric vehicle sales and energy storage demand lifted them in the second half. A model that missed the 31% rise in output would have misjudged the surplus. The IEA's 2026 outlook says that gaps between projected demand and anticipated supply for copper and lithium over the next decade have narrowed, according to reporting on the release.
What inputs go into a model?
- Demand drivers. Vehicle sales, battery size and chemistry, and grid storage. The IEA reports that electric car sales rose 20% to more than 20 million in 2025 and expects about 23 million in 2026, while sales fell 8% in the first quarter of 2026 on policy changes in China and the US.
- Existing supply. Mine output by country, which for lithium in 2025 was led by Australia (92,000 t), China (62,000 t) and Chile (56,000 t) according to the USGS.
- New supply. Projects weighted by the chance they arrive on time. The IEA says investment fell 9% in 2025, which lowers that probability.
- Recycling and substitution. For cobalt, the USGS notes cobalt-free lithium iron phosphate batteries held significant market share in China.
- Policy and inventory. Quotas, stockpile purchases and export controls, treated as separate scenarios.
Which policy shocks must models include?
Policy shocks can move a balance more than geology or demand, so models treat them as explicit scenarios. The table lists measures with a quantified effect from the cited sources.
| Measure | Size | Source |
|---|---|---|
| DRC cobalt export quota, 2026 and 2027 | Up to 96,600 t a year including 9,600 t for reserves, against 230,000 t of 2025 mine output (about 42%) | USGS cobalt |
| Indonesian nickel ore quota, 2026 | 260-270 million t planned, against 379 million t approved for 2025 (about a third lower) | Argus |
| China rare earth licensing | Seven medium and heavy rare earth elements licensed since April 2025; five more under the suspended October 2025 controls | USGS rare earths |
| Zimbabwe lithium concentrate export ban | Announced for January 2027; Zimbabwe mined 28,000 t of lithium in 2025 | Mining.com, USGS |
Who publishes balances and forecasts?
- US Geological Survey. Annual summaries with production, consumption, prices and net import reliance, but no forward projections.
- International Energy Agency. The annual Global Critical Minerals Outlook compares supply with demand under policy scenarios; the 2026 edition appeared on 17 July 2026.
- International Nickel Study Group. The source of the nickel surplus estimates quoted by the USGS.
- Price agencies and exchanges. Their forward curves show what the market expects, such as CME lithium hydroxide contracts that now trade out to 2028. See benchmarks and price reporting agencies.
Frequently asked questions
What is a supply-demand balance for a critical mineral?
A supply-demand balance for a critical mineral is production plus recycling minus consumption in the same unit and year. A positive balance is a surplus that tends to depress prices, and a negative balance is a deficit that tends to raise them.
Was there a lithium surplus in 2025?
There was a modest lithium surplus in 2025 by USGS figures. World production excluding the US was about 290,000 t of lithium against consumption of 263,000 t, a surplus of roughly 27,000 t, although prices rose in the second half of the year as demand grew.
What is lithium carbonate equivalent?
Lithium carbonate equivalent is a standard unit that expresses lithium products as the amount of lithium carbonate that would contain the same lithium. It is calculated by multiplying lithium content by 5.323.
Why do forecasts for critical minerals differ?
Forecasts for critical minerals differ because they make different assumptions about electric vehicle sales, battery chemistry, project delivery and policy. Export quotas and controls, such as the DRC cobalt quota of up to 96,600 t a year, can change a balance by more than a change in demand.
Sources
Read on October 12, 2026. Figures on this page come from these documents; where a number is an estimate, the source says so.
- USGS Mineral Commodity Summaries 2026: Lithium, cobalt, nickel, rare earths
- Global Mining Review: report on the IEA Global Critical Minerals Outlook 2026 (17 July 2026)
- IEA: Global EV Outlook 2026, executive summary. The IEA site blocks automated readers, so these figures were read from press reports of the outlook, including Engineering News (21 May 2026)
- Argus: Indonesia to cut nickel mining quota in 2026
- Mining.com: Zimbabwe to ban export of lithium concentrates from 2027
- Fastmarkets: CME lithium hydroxide contract sees first trades for 2028 contract months
