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.
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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.
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