Marginal recovery for lithium industry expected

Since 2018, the prolonged downward trend for lithium compound and mineral concentrate prices has caused a difficult and often painful environment for many lithium producers. Prices continued to glide downwards also in Q3 2020, with China spot prices falling below US$5,000/t CIF for battery grade lithium carbonate, whilst contract prices edged closer to US$10,000/t CIF.

Roskill says the continued decline has led to many lithium producers operating at below or close to marginal cost of production. As a result, lithium spot prices are expected to remain flat or show marginal recovery into Q4 2020.

The latest casualty of the period of falling lithium prices was the closure of Altura Mining. Analysts say it may represent a turning point for the lithium industry. The reduction in spodumene production and increasing consumer attention to supply security presents opportunities for price increases, though the large volumes of inventory held by mineral converters will need to be reduced.

Fundamental demand growth for lithium compounds remains strong, with demand from rechargeable battery applications forecast to exceed 220kt LCE in 2020, representing roughly 70% of total lithium demand.

Projection growth in Li-ion battery demand from EV applications continues to be strengthened with major markets targeting an earlier transition to xEV only sales, in order to reduce emissions from transport.

The changeover to 5G technologies also creates opportunities for rapid growth in battery demand, not directly from portable electronics but their supporting infrastructure, though Li-ion technologies are expected to see greater competition from other battery technologies in these applications.

Roskill’s new Lithium: Outlook to 2030, 17th Edition report provides access to in-depth analysis of the lithium industry and Roskill’s ten-year outlook for demand, market trends and raw materials supply.

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