Lithium goes from boom to bust
There are signs of an oversupply of lithium – the metal used for EV batteries.
Lithium prices have plunged by 75% this year and the rout seems “far from over”, say Yvonne Yue Li and Annie Lee at Bloomberg. The white-coloured metal is a key ingredient in lithium-ion batteries. Excitement about demand for these batteries from electric vehicles (EVs) drove a huge rally during COVID-19. The price of Chinese lithium carbonate leapt by 1,400% between late 2020 and November 2022. But over the past year prices have receded amid signs of a glut.
Shares in US-listed Albemarle, the world’s biggest lithium miner, have plunged by more than 50% in a year. It mines lithium in Chile, Australia and the US. After mining, most of the metal is processed in China, making Chinese lithium prices the industry benchmark.
The sell-off has been driven by “brewing demand problems”, says Al Root in Barron’s. For one thing, car companies stockpiled the metal during the price frenzy, but that has left them with big inventories that don’t need immediate replenishment. EV uptake is still growing strongly, with sales up 50% or so in both the US and Europe so far this year, and a 20% rise in China. But that has fallen short of even more bullish predictions made at the height of the price boom.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
UBS analysts expect the global EV rollout to be slower than previously expected, says Étienne Goetz in Les Echos. EVs now look likely to represent just 18% of vehicle sales worldwide in 2024, down from forecasts of 20% previously. Come 2030, that share will be 47%, less than the 54% previously expected.
The analysts cite uncertainty among consumers as interest rates spike, falling government subsidies to buy EVs, and still insufficient charging infrastructure as factors constraining uptake. Lithium supply looks set to outstrip global demand until 2028. The white metal will be under pressure for some time.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Related articles
- The bull market in this commodity is over
- Where to invest in the metals that will engineer the energy transition
- Should you buy this mining trust?
- Power your portfolio with the profits of China’s electric-vehicle makers
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Alex Rankine is Moneyweek's markets editor
-
Twenty 'finfluencers' questioned under caution by the UK regulator
The individuals were interviewed voluntarily using the Financial Conduct Authority’s criminal powers
By Chris Newlands Published
-
Number of ISA millionaires triples in three years
The number of people with £1 million in their ISAs has tripled in three years to reach 3,180. But could next week’s Budget put an end to future ISA millionaires?
By Ruth Emery Published
-
What will a broken-up Google look like?
The US courts have ruled that Google is a monopoly, leaving it facing the prospect of a break-up. WIll that be a good thing?
By Matthew Lynn Published
-
How will the UK gambling sector be hit by the Budget?
There are concerns for the UK gambling sector in the lead-up to the Autumn Budget. What could be on the cards?
By Dr Matthew Partridge Published
-
HSBC returns to cost-cutting plan
HSBC is set to revamp its commercial banking division – but will it come at a cost?
By Dr Matthew Partridge Published
-
Pfizer shares rise as US investor takes $1 billion stake
Pfizer shares are on the up since US activist investor Starboard Value built up a stake in the drug maker. But strategic options appear limited
By Dr Matthew Partridge Published
-
Qualcomm could acquire rival Intel – but securing the deal won't be easy
A tie-up between Qualcomm and its semiconductor rival Intel would be a coup. But multiple regulatory and commercial hurdles lie ahead.
By Dr Matthew Partridge Published
-
How to invest in the quiet market months
Here's how to invest in the quiet market months, since “sell in May” hasn’t paid off this year.
By Cris Sholto Heaton Published
-
Spire Healthcare: invest in the booming demand for private healthcare
Spire Healthcare is one of the few listed companies benefiting from the growing trend in private healthcare. Should you invest?
By Rupert Hargreaves Published
-
Are insurance companies a good investment?
Costs may be soaring but the insurance sector is currently going through one of its most profitable periods. The market has been slow to realise the opportunity here
By Rupert Hargreaves Published