A lack of investment in the lithium supply chain could push
the market back into undersupply in the second half of the next
decade, and further boom-bust cycles may follow, delegates at
the London Metal Exchange’s LME Week heard.
A shortage of lithium is being forecast in the long term due
to the lack of investment in mining projects, speakers and
panelists said during a panel discussion at the event last
Demand for lithium will catch up with today’s
oversupply but, given the weakness in prices, miners were
reluctant to invest in new or expanded capacity, because this
could move the market into undersupply by the middle of the
next decade, they added.
As a result, the market will experience further boom and
bust cycles, according to Daniel Jimenez, partner at
consultancy iLi Markets, who was speaking on the LME Week
Battery Materials panel on October 31.
William Adams, head of base metals and battery research at
Fastmarkets, described the electric vehicle (EV) and battery
materials market as being in a "valley of disappointment," in a
presentation that preceded the panel. These sentiments were
later echoed by the panelists.
The lithium market has been facing low prices, a weakening
global economic outlook, a softening in
demand for EVs, and lithium mining projects that have
either cut their
output or halted altogether.
Weak prices forecast
Adams forecast that, as a result of the weak outlook,
battery-grade carbonate prices will stay below $10 per kg but
will begin to recover around the middle of 2020.
Fastmarkets’ assessment of the lithium carbonate 99.5% Li2CO3 min, battery
grade, spot prices cif China, Japan & Korea, was $9-11
per kg on October 31. This was down by 29% from $13-15 per kg
two years ago.
The downturn in the market was the result of an increase in
lithium supply as well as increased capacity to convert
material, which have caused the move to oversupply.
Producers were taking a short-term view of the market,
according to Jimenez. Demand may reach an estimated 1 million
tonnes per year of lithium carbonate by 2025 but that demand
will be met by expansions and projects already in the pipeline,
In the longer term, however, tightness could prevail.
There will be an additional 1 million tpy of lithium
carbonate demand from 2025 through to 2030, bringing the total
to 2 million tpy, Jimenez said. "We have no clue where that
supply will come from," he added. "A boom-and-bust cycle will