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If you haven’t checked the price of lithium lately, you might be in for a surprise. Spot prices for lithium carbonate in China have collapsed by two-thirds since hitting record highs in November of last year. Prices have gone from $84 thousand per ton to $25 thousand per ton. That unwinds the vast majority of a spectacular surge that played out from 2020 to 2022.

Lithium initially surged 1,279% from July 2020 to March 2022 as part of the broader explosion of commodity prices and booming demand for electric vehicles, eventually peaking up 1,387% from the post-COVID-19 lows.

It’s easy to forget that this critical battery input had already gone through one such cycle. A 224% rally in six months during late 2015 and early 2016 before a long, slow bear market that saw prices down 78% over several years.

In the equity market, the price cycle hasn’t been as dramatic in percentage terms, but there has still been a double cycle of surging stock prices in 2016 followed by a grinding bear market, and then an even more dramatic surge through late 2022 that is now sliding into reverse.

On Thursday, Chile’s government announced reforms to its lithium extraction policy. While existing contracts with firms that operate in the rich lithium brine deposits of the Chilean Atacama desert will be honored, the market is looking at weaker lithium prices and the fact that existing contracts will be replaced by less favorable ones 10+ years down the line and hitting lithium players. SQM was off 21% on Friday while ALB was 10% lower.

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