Skip to content Forecasting the Lithium Market: December 26, 2023
Lithium carbonate’s price plunged to a new low of CNY 97,500 per tonne, hitting its weakest point since August 2021. This represents a dramatic 80% drop over the year. The main reason? An oversupply crisis. In China, where electric vehicle sales are slowing, demand for lithium, crucial for batteries, is dwindling. This slowdown comes at a time when battery manufacturers typically stock up.
But there’s more to the story. Chinese firms are sitting on large stockpiles of lithium. These high inventories are a result of the Chinese government’s generous subsidies in 2021 and 2022. This subsidy-driven supply surge has changed the market dynamics drastically. As a result, key market analysts now predict a lithium deficit might not emerge until 2028. This is a stark contrast to earlier predictions of ongoing shortages. Recall, these shortages once pushed lithium prices to a peak of CNY 600,000 in November 2022.
Adding to the complexity, previous investments aimed at increasing lithium supply are set to bear fruit. UBS estimates that the global carbonate equivalent supply could jump by 40% in 2024. This will likely exacerbate the existing surplus, further impacting prices.
About The Author
Comments are closed.