Fitch Solutions, a leading commodity research firm, has declared the era of surging lithium prices over. Analysts predict a period of stability with prices unlikely to reach the highs of 2022 and 2023 for at least the next decade.
Era of Low Lithium Prices Expected to Last a Decade
The lithium market is undergoing a significant shift, according to Fitch Solutions. Rapidly expanding global supply has pushed the market into surplus, leading to a dramatic drop in prices. Sabrin Chowdhury, head of BMI commodities analysis at Fitch Solutions, expects lithium prices to remain subdued for the next 10 years.
“This stabilization is primarily due to a rapidly expanding global supply, which has already pushed the market into surplus,” Chowdhury said. “We expect no return to previous highs for lithium. Prices will remain below the peaks of 2022 and 2023 for at least five to 10 years.”
Fitch Solutions forecasts that the price of lithium carbonate in China will average $15,500 per tonne in 2024, rising to $20,000 per tonne in 2025. This represents a stark contrast to the $72,000 per tonne average seen in 2022. The prediction for lithium hydroxide monohydrate follows a similar trend, with an expected average of $14,000 per tonne in 2024 and $20,500 in 2025, down from $70,000 per tonne in 2022.
Era of Low Lithium Prices Expected to Last a Decade
The lithium market is undergoing a significant shift, according to Fitch Solutions. Rapidly expanding global supply has pushed the market into surplus, leading to a dramatic drop in prices. Sabrin Chowdhury, head of BMI commodities analysis at Fitch Solutions, expects lithium prices to remain subdued for the next 10 years.
“This stabilization is primarily due to a rapidly expanding global supply, which has already pushed the market into surplus,” Chowdhury said. “We expect no return to previous highs for lithium. Prices will remain below the peaks of 2022 and 2023 for at least five to 10 years.”
Fitch Solutions forecasts that the price of lithium carbonate in China will average $15,500 per tonne in 2024, rising to $20,000 per tonne in 2025. This represents a stark contrast to the $72,000 per tonne average seen in 2022. The prediction for lithium hydroxide monohydrate follows a similar trend, with an expected average of $14,000 per tonne in 2024 and $20,500 in 2025, down from $70,000 per tonne in 2022.
Low Prices Could Reshape Lithium Industry Landscape
The extended period of low lithium prices is likely to reshape the lithium industry landscape. Fitch Solutions analysts believe it could benefit cost-saving methods and lead to consolidation among producers.
“Out of 164 total operations in our database, 126 individual companies own these projects,” said BMI metals and mining analyst Amelia Haines. “This creates an optimal environment for mergers and acquisitions, with larger, well-funded miners looking to acquire promising lithium assets to meet growing demand.”
Junior miners and developers may need to adopt new technologies, such as direct lithium extraction for brine projects, to stay competitive. Additionally, the industry could see a wave of consolidation as numerous smaller players struggle to compete.
Technological Advancements and Growing Demand
Fitch Solutions highlights technological advancements as a key factor impacting both supply and demand in the lithium market. New technologies, like direct lithium extraction, have the potential to reduce production times and environmental impact compared to traditional methods.
“Relatively new direct lithium extraction technology can potentially reduce production times and environmental impact compared with traditional methods,” said senior metals and mining analyst Olga Savina.
Despite the price decline, many major producers remain profitable due to their ability to maintain low production costs. This is particularly true in Australia, where spodumene production costs are significantly lower for established mines. However, some higher-cost producers have been forced to curtail production or even go out of business.
Lithium demand is expected to continue growing, driven primarily by the electric vehicle (EV) sector. However, advancements in battery technologies, such as the rise of lithium-iron-phosphate (LFP) batteries and potential breakthroughs in solid-state batteries, could influence future demand.
Source: Mining.com
