You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. It actually surprised everyone,” said Scott Sklar at George Washington University. He could be talking about lumber or used cars or semiconductors, but he’s talking about lithium. Thankfully, many analysts expect the slowdown in the lithium and EV markets to be a temporary blip.
- On a year-on-year basis, numerous market participants, such as Albemarle, stated that the organization had soared its profits by seven folds during the third quarter of 2022.
- All the port operations and supply chains are running smoothly without any constraints.
- At the same time, demand for EVs didn’t meet the perhaps overly optimistic expectations of some carmakers, said Tony Alderson, an analyst at Benchmark Mineral Intelligence.
- The price trend of the first half of Q2 also follows the bearish trajectory of the last month of 1st quarter, 2023, and closed the window at USD (Ex-Shenzhen, China) due to low price pressure from the upstream market.
- The commodity remains extremely valuable due to its essential roles in the fields of medicine, technology, and to investors looking to add a sought-after commodity to their portfolio.
The price percentage change from the previous year’s Q4 was -76%, and the price percentage change from the previous quarter was -66%. The price percentage comparison of the first and second half of the quarter was -32%. Overall, the North American Lithium Carbonate market experienced a bearish trend due to low demand and adequate supply. Besides being used extensively in the medical and psychiatric fields, lithium also offers vast applications in other areas.
Benchmark Lithium Price Data
On Oct. 18, lithium stocks plummeted following a sell-side broker’s downgrade for Albemarle ALB and SQM SQM. This was because of expectations that the lithium market will see a supply surplus in 2024 and 2025, leading to lower prices. We disagree, and continue to forecast a price rebound as strong demand growth outpaces supply, leading to a deficit in 2024.
This development is majorly attributed to the consistent soaring dynamics of the EVs market in the North American region. The offtakes have remained constant, and the availability in the spot market has remained staggering. According to major market players, the delivery date has slipped to the end of the first quarter of 2023 for the overseas market participants. In the current supply-demand scenario, it has been estimated that to match rising demand, the expansion of 59 new mines with a minimum capacity of 45KTPA was required, with proper recycling infrastructure by 2035.
Metal Prices & Charts
In addition, the increment in the energy cost has substantially impacted the operating rates at the manufacturing facilities, curtailing the offtakes volumes by a considerable margin. In response, the DDP Antwerp discussions for Lithium Carbonate were assessed at USD per tonne in December 2022. Lithium concentrate-producing hard-rock mines are not very sensitive to increases in reagent prices because of the limited reagent consumption involved in the flotation or dense media separation processes. But rising costs for other raw materials could be a critical factor driving up other on-site and sustaining capital costs. Geological Survey estimated data, the average price of ammonia, a material used to produce explosives, increased 128.7% in 2021. Market Intelligence data shows concentrate producers’ other on-site costs increased $206/t LCE in the same year.
First, a rare slowdown in EV demand in the pivotal Chinese market has taken the markets by surprise. According to the China Passenger Car Association (CPCA), sales of new energy vehicles, including pure battery EVs and plug-in hybrids, fell 6.3% in January, a sharp contrast to a blistering 90% growth in 2022. Stay ahead of the competition with ChemAnalyst, the premier provider of actionable market news. We offer real-time updates on prices, tracking and reporting pricing trends, market news, and demand & supply for over 450 commodities. In its November report, MI forecast the average lithium carbonate price will fall 10% year on year in 2023 to $45,833/mt CIF Asia with the growing supply.
As a ripple effect, the supply was pressurized, whereas the demand soared tremendously ahead of the peak rush in the Chinese domestic market. The Ex-Shenzhen discussions for Lithium Carbonate were assessed at USD per tonne. Most quotes in domestic currency growth do not reflect in USD amidst the depreciation of CNY against the USD in the third quarter.
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The price of sulfur, which is used to produce sulfuric acid, an important reagent for the brine recovery process, rose about 300% in 2021. While we see rising supply, we think enough projects will face delays to maintain a market deficit as demand grows. If there were little or no supply shooting star candlestick delays, the market could see a surplus (and falling prices) over the next several years. In the fourth quarter of 2021, the Asia Lithium Carbonate market maintained its persistent growth, and the prices exceeded by 33.34% compared to the estimated projected offers by the December end.
This would put the market in a small surplus of 2,000 mt in 2023, improving from a deficit of 15,000 mt in 2022. “Demand is still healthy, but battery and EV makers are currently destocking instead of placing new orders. The subdued spot demand therefore is weighing on sentiment and pressing down prices,” Susan Zou, Shanghai-based vice president at Rystad Energy. The offered quotes are anticipated to decline further from the exporting nations. The buyers remained cautious in the face of Asia’s slump, and consumers were reluctant for new purchases, resulting in a strong wait-and-see consumer attitude.
The supply outlook in the Belgium market is also bearish because adequate inventories of the product is available in that region. All the port operations and supply chains are running smoothly without any constraints. In May, the market sentiment dropped further in the domestic market of Belgium due to the lowering of price pressure from the major exporter Chile. Also, the demand strength from the downstream lithium-ion battery manufacturing industry and Energy storage system (ESS) market seemed to be weaker. Following the 1st quarter of 2023, Lithium carbonate prices tumbled to DDP USGC(USA) USD 54700/tonne. The temporary inactivity of the northeast Asian downstream market impacted the demand percentage growth.
Investing in Lithium
This dynamic reflects weak investor sentiment, largely influenced by the slow recovery of the Chinese economy throughout the quarter. The demand from downstream lithium-ion battery manufacturing and Energy Storage System (ESS) manufacturers remained weak, leading https://g-markets.net/ to unfavorable sentiments in the region. As of September 2023, lithium carbonate prices were assessed at USD 29,000 per metric ton. In the first quarter of 2023, the offered quotations for Lithium Carbonate dropped considerably in the Chinese domestic market.
Thanks to sky high lithium prices, a number of lithium shares have recorded exceptionally strong gains for investors. Soaring lithium prices have paved the way for alternative chemistries such as sodium-ion batteries, and while this has gained some traction in China, 73% of respondents said this would not pose a significant threat to lithium demand. Around 58% of respondents expected the removal of Chinese EV subsidies to slow down overall EV sales in 2023, as skyrocketing lithium prices saw battery pack costs increase for the first time in over a decade. A survey of Asian market participants presented a more conservative view of lithium prices.
The downward pricing trend was due to imports of low-priced goods and low downstream demand. The prices of Lithium Carbonate in Japan had decreased by 6.5%, with a current quarter ending price of USD 17050/MT of Lithium Carbonate Battery Grade CIF Osaka. The market had a bearish sentiment, and the inquiries from the ESS market were presumed to remain poor. The inquiries from the downstream lithium-ion battery manufacturing industry had remained poor, and the inventories of the product were anticipated to remain high in the domestic market. The sellers were further lowering the prices, keeping the lithium prices at lower levels, and anticipating the possibility of restocking in the fourth quarter.
Moreover, the Overall lithium carbonate market is stabilized in the USA, assisted by the slowdown in new orders and the slippery slope of export sales. The supply chain operating at optimum levels, and sufficient inventories of the product were reported. However, the supply gap widening and thriving demand for EV batteries mean that these relatively lower prices may not last long. The surge in the spot market prices of Lithium carbonate in the Asian market resulted in the decline of the offered quotes in the region as the market participants lowered the profit margins amidst rising market competition. The Lithium Carbonate market in Europe during the current quarter of 2023 (Q4) faced significant challenges and experienced a downward trend in prices.
It is worth noting that there were no significant instances of port congestion or supply chain constraints reported for the quarter. Meanwhile, the demand within the lithium-ion battery manufacturing industry saw a noticeable decline, with consumer inquiries being notably subdued. This decline was further exacerbated by uncertainties surrounding economic conditions and a general downturn in business sentiments.
