Lithium price up 572% in 1 year

Oil prices, multiple commodity prices repeatedly peaking after ports in Ukraine closed, sanctions against Russia and disruptions to oil exports in Libya have left buyers of energy, crops and metals scrambling. obtain an alternative supply.

Russia is one of the world’s most important exporters of raw materials, from crude oil and gas to wheat and aluminum, and the country may temporarily “disappear” from the supply chain of goods due to sanctions. Penalties sent traders and importers into a “crazy”.

Prices of base metals such as aluminum, copper, tin have cooled down compared to the beginning of the month – when people were really concerned about the possibility of metal export disruption. In fact, supply concerns persist, from the possibility of further sanctions targeting Russia’s exports to disruptions in actual output and logistics disruption.

But the Ukraine crisis is only giving rise to another, more powerful trend: a global shift to low-carbon energy sources.

This energy transition is driving the next super cycle of commodities. Clean energy technologies require more metals than fossil fuel technologies. Prices of “green” metals are forecast to reach historic highs.

But few “green” metals have seen a price boom like lithium.

After more than quadrupling in value last year, lithium carbonate will continue to soar in 2022, according to Benchmark Mineral Intelligence. A mid-March review by the battery supply chain research agency found that 99.5% Li2CO3 lithium carbonate is now averaging $76,700 a tonne, up 10% in two weeks and 95% since the start of the year. A year ago, this commodity traded at 13,400 USD/ton.

Lithium hydroxide, used in the production of high-nickel cathode, is also picking up pace as prices are up 120% this year.

Benchmark Mineral Intelligence says China’s inventory levels for lithium hydroxide, carbonate and spodumene are very low, meaning prices will remain high. “Demand for raw materials is very strong. Therefore, high prices will be maintained in the near future.”

The explosion in prices shows that the lithium supply is simply not enough to supply the market.

Explosive demand

The most recent lithium boom was five years ago, attributed to manufacturers not anticipating the wave of demand stemming from a massive wave of electric vehicle production in China after the government “opened the door”. sugar” with subsidy packages.

The subsequent supply reaction proved that the market was overheated, leading to a sharp drop in prices during 2018-2020. Since then, new mines have been destroyed, expansion projects have been postponed, many operators have had to suspend operations and leave.

Then, in a classic commodity boom cycle, the bullish wave re-emerges. Lithium manufacturers are, again, ill-prepared to meet the current overwhelming demand, spurred by the electric vehicle revolution.

Sales of electric vehicles and new energy vehicles (NEVs) in the key market China grew 157.5% to 3.52 million units in 2021.

Many electric buses in China have switched to using lithium iron phosphate (LFP) batteries. Two years ago, Tesla introduced LFP batteries for the base Model 3 in China to reduce the car’s starting price from $48,000 to nearly $39,000. Last year, Tesla announced that it was converting all NCA (aluminum nickel cobalt) batteries to LFP technology. CEO Elon Musk revealed the improving energy density of LFP batteries makes it possible for users to use cheaper, cobalt-free batteries in low-end vehicles to free up the supply of lithium-ion batteries for models. other.

However, in a recent report, Benchmark Intelligence said that rising lithium carbonate prices have pushed the cost of LFP batteries about $1 per kWh higher than nickel batteries.

(According to Economic Lifestyle)