Lithium Prices Have Crashed Spectacularly, Heres What Next

The surge in the quotations was majorly focused in the second half of the quarter. As the world transitioned towards a greener economy, numerous global EV producers raced to secure the supplies of Lithium Carbonate, a key component how to find overbought stocks of EV battery manufacturing. As a ripple effect, the offers for Lithium Carbonate in Northeast Asia surged by 24.82% in the Q4 and the Ex-Works Shenzhen (China) discussion were settled at USD per tonne during the quarter ending.

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.

  1. The success of your investment will depend on the sustained popularity of mobile devices and the increased popularity of electric cars.
  2. In the late 1800s, it was used to treat mania with such positive results that lithium is still used in psychiatry today.
  3. In Belgium, the prices of Lithium Carbonate decreased by 37% compared to the previous quarter and by 76% compared to the same quarter last year.
  4. Lithium is also used to create alloys with magnesium and aluminium which are then deployed in armour plating, aircraft and trains.

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.

At the start of 2nd quarter of 2023, due to declining demand from the downstream Electric vehicle(EV) industry, the market sentiments for lithium carbonate slept down in April. The export data also shows a downfall in nature due to declination in the demand curve slope of the Asian battery manufacturing industry. Some other facts playing behind are the lack of competitiveness of the market participants, consumer tendency to purchase goods at a lesser amount both domestically and internationally, etc.

How Is Lithium Traded?

We see lithium stocks as undervalued as the market expects a supply surplus, but we disagree. Our expert analysts not only deliver accurate price data but also explain the exact reasons why prices have gone up or down. Lithium mining produced an estimated 82,000 metric tons of lithium in 2020 and the global reserves in 2021 is at an estimated 21 million tonnes. Lithium carbonate is prescribed for manic depression (also known as bipolar disorder) and sometimes for lesser grades of depression. It has a potent reaction to water and with air, it rapidly oxidizes after being cut. When burning, lithium has a crimson flame that turns white when the fire turns more vigorous.

Price History of 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 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.

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.

Metal Price Fixings?

SQM, Chile’s second-largest lithium producer, reported a 56.4% plunge in third-quarter net earnings and the Q4 was no different due to plummeting lithium prices. Overall, the market witnessed minimal trading activities and remained sluggish in terms of transactions in the region. As of December 2023, the prices of lithium carbonate FOB San Antonio were assessed at USD 16700/MT. In North America, the price of lithium carbonate continued to decline during the third quarter of 2023.

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.

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.

By the time their operations come on line, they could be dealing with wildly different lithium prices. If you’re in the business of mining lithium — which is used in lots of batteries, especially the ones in electric vehicles — it’s been a rough few months. Lithium is primarily obtained from the spodumene in pegmatite deposits and Lithium salts from underground brine deposits. Lithium Carbonate exists in anhydrous powder and is used as a precursor for compounds used in lithium-ion batteries. It is also used for the production of oven glassware, etc. the major manufacturers for Lithium Carbonate are Targray, Kompass, ABSCO, Albermarle, etc.

In mid-Q3, Chile’s President declared the nationalization of lithium deposits, which resulted in a drop in lithium stocks throughout the world. Overall, demand in the downstream lithium-ion battery manufacturing industries remained firm, with a jump in new purchase orders in August. Core Lithium Ltd reported low production expectations for fiscal years 2024 and 2025. The Asian market’s inquiries were slow since industry players reported sufficient stockpiles of the commodity in the area. According to market participants, slower product offtakes were recorded due to larger inventories in the domestic market.

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.