Lithium Prices Have Crashed Spectacularly, Heres What Next

Starting Jan. 1, 2023, Beijing no longer offers subsidies to buyers of electric vehicles, ending 13 years of the government offering subsidies to EV buyers to achieve price parity with internal combustion vehicles. The inability of China to meet its own demand for lithium, despite being the world’s 3rd-largest producer, has significant implications for other countries that rely on Chinese lithium. This is why the US aims to develop its own lithium supply chain that doesn’t depend on China. I believe that there are two reasons for the stock being massively undervalued. Further, Standard Lithium needs to find a partner for co-development or financing the South West Arkansas project. The plunge in lithium prices is a golden opportunity to consider the best lithium stocks to buy and hold.

It notes that the lithium market has undergone “significant structural change in recent years” due to new producers entering the market and the rapid pace of electric vehicle (EV) demand growth. The high prices in 2021 and videforex 2022 incentivised more investment in lithium production, resulting in growth in supply outpacing demand. Adding to this, lithium consumers destocked during the period of high prices to lower the cost of carrying inventory.

  1. But worked backwards, it amounts to about 209 g Li metal in the battery/kWh.
  2. The best time to buy is when sentiments are depressed than in times of euphoria.
  3. Lithium can rarely be obtained by investors in its physical form but the metal can be traded effectively in other ways.
  4. Final cell capacities are given in Wh/kg for NMC333, LFP and LMO batteries, as well as the mass of cathode per unit mass of finished cells (which are roughly 25-27% for the cells of interest).
  5. Despite being a common substance, lithium prices experienced an astounding 1,000% increase from 2021 to the end of 2022.

The price of lithium carbonate is up by 47% from 2015 and the year 2017 will see increased sales of pure electric cars. Add the fact that Li-ion batteries are also used for mobile devices such as smartphones, tablets, laptops, and other wearable devices, and the demand for the commodity will surely increase as well. Looking forward to a long-term demand for lithium to exceed supply, SQM has strategically invested in expanding its production capacity. These developments position the company to augment its market share in the lithium supply chain, particularly for EV batteries. Global EV sales are still booming, but the growth rate is slowing “from ‘tremendous’ to ‘excellent’,” one lithium sales executive told MarketWatch. Responding to consumer demands, auto giants like Ford and GM have also delayed plans to introduce new EV models, leading to an oversupply of lithium, according to the Global Automotive Trade Network, a Chinese analytics site on car markets.

Chile and Argentina extract lithium from the brine of underwater lakes. The remaining saline solution is processed to extract the lithium, usually by electrolysis. Also in 2012, the automotive sector accounted for 14% of the Li-ion battery market. By the end of 2016, this will grow to as much as 25% by the end of 2016. For most people in previews decades, lithium was either a controversial treatment for brain disorders or a song by Nirvana. In the 1790s, a Brazilian naturalist discovered the mineral called petalite on an island in Sweden.

The average annual price for battery-grade lithium carbonate fell to $41,166 per metric ton in 2023, down nearly 40% from $68,075 in 2022, according to data from Benchmark Mineral Intelligence. Prices had dropped on a quarter-to-quarter basis, down about 38% in the fourth quarter. Here are our top picks for lithium stocks that are worth each penny of consideration. As an overview, the Company’s South West Arkansas project has a base-case production estimate of 30,000tpa of battery quality lithium. Further, the project has an after-tax base case net present value of $4.5 billion.

Argentine federalism complicates Milei’s lithium ambitions

Last year, a record 1.2 million electric vehicles were sold in the U.S., according to estimates from Kelley Blue Book, a Cox Automotive company, with the EV share of the total domestic vehicle market at 7.6%, up from 5.9% in 2022. Lithium, a vital elemental metal, also dubbed as “white gold”, has gained significant attention as a sought-after commodity. This is particularly due to its crucial role in battery manufacturing for electric vehicles (EVs). I would therefore ignore the near-term headwinds for lithium stocks and buy the fundamentally attractive stories. Given the impending supply-gap, lithium will be trading at new highs in the next few years. Let’s discuss three lithium stocks that are worth accumulating around current levels.

More On MarketWatch

“Although we had some sales to the end consumers, the volume is very small. Consumer demand was very thin.” Get updates on the IEA’s latest news, analysis, data and events delivered twice monthly. By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don’t worry, though – you’re not locked in, and can cancel your auto-renewal at any time before each ‘anniversary’ date without question or penalty. Last week, we revealed the three best-performing ASX lithium shares of 2023.

Average investment in grid and batteries by country and region in the Net Zero Scenario

The lithium supply response has charged ahead of demand, price reporting agency Fastmarkets said in a report this week. “Demand is still healthy, but battery and EV makers are currently destocking instead of placing new orders. The subdued spot demand therefore is weighing on sentiment and pressing down prices,” Susan Zou, Shanghai-based vice president at Rystad Energy. Today, more and more people also know lithium-ion batteries, because of the proliferation of mobile devices such as smartphones and tablets.

This is the lowest level in two years at $20,782 per tonne in the current month. As lithium carbonate prices have fallen by 67% year-on-year, Chinese refining companies are responding by cutting production or suspending operations. The surge in EV sales has fueled optimism among investors regarding companies involved in lithium production and refinement.

How Is Lithium Traded?

The spot price of spodumene averaged about US$3,840 per tonne in 2023. The government expects the lithium spodumene price to fall to US$2,300 in 2024 and US$2,200 in 2025. Thankfully, many analysts expect the slowdown in the lithium and EV markets to be a temporary blip.

The commodity remains extremely valuable due to its essential roles in the fields of medicine, technology, and to investors looking to add a sought-after commodity to their portfolio. The metal is found in trace amounts in many rocks and mineral water but is more abundant in minerals such as petalite, spodumene, lepidolite, and amblygonite. Lithium is toxic and ingestion is often done under close medical supervision. 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. Lithium is the only metal that reacts at room temperature with nitrogen.

The Company is already working towards the Definitive Feasibility Study and Front-End Engineering and Design services for the project. Additionally, the Lanxess project has an after-tax net present value of $722 million. The price of lithium has collapsed by more than 80% in the past year, now ringing in at $13,200 per ton (its lowest level since 2020), according to data group Benchmark Mineral Intelligence. “Market participants expect downstream lithium demand to remain relatively weak and with no imminent concerns about supply shortages, we forecast a tentatively balanced market in 2024,” according to Fastmarkets. Lithium is earning its current moniker, “white gold,” and all the geopolitical contention that comes with it.

On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines. Any trading and execution of orders mentioned on this website is carried out by and through OPCMarkets. Core Lithium announced on Wednesday a temporary suspension of open pit mining operations to preserve cash.

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