There may be a surplus of lithium in 2023 as higher supply quantities are expected to surpass weakening demand for the metal. It could result in an excess supply, according to Matty Zhao, Bank of America Securities’ head of Asia Pacific basic materials.
“We see a lot of supply coming out from lithium mines … We are expecting 38% lithium supply growth this year. That’s why 2023 is likely to turn into a surplus year for lithium.”
Matty Zhao, Bank of America Securities’ head of Asia Pacific basic materials (via CNBC)
Interestingly, she also anticipates that the growth in demand for electric vehicles in China will slow down to 22% this year from 95% the year before.
It is worth noting that lithium is an essential component of electric vehicle batteries, an industry that is becoming increasingly competitive, per Zhao.
Lithium prices to increase
Zhao claims that increased lithium prices since 2021 have encouraged the addition of new supply streams.
These new supply streams include Albermarle’s Wodgina mine, Tianqi Lithium’s Greenbushes mine, and Pilbara Minerals’ Ngungaju Plant in Pilgangoora.
“Meanwhile, existing capacities like Sociedad Química y Minera’s Salar de Atacama, Mineral Resources’ Mt. Marion are expanding aggressively as well.”
Matty Zhao, Bank of America Securities’ head of Asia Pacific basic materials (via CNBC)
The price of lithium carbonate on the spot market reached 277,500 yuan per ton at the end of the two years that ended in December 2021.
After that, however, prices skyrocketed to an all-time high of nearly 600,000 yuan per ton in November 2022, more than 12 times higher than in January 2021.
In May of the previous year, Goldman Sachs predicted that the lithium supply would increase by an average of 33 percent each year between 2022 and 2025.
EV demand affects the lithium demand
“We expect Chinese lithium project expansions to multiply rapidly, in particular integrated hard rock projects, just as ex-China spodumene supply continues to strengthen.”
Matty Zhao, Bank of America Securities’ head of Asia Pacific basic materials (via CNBC)
The company also stated that increasing sales of electric vehicles (EVs) and stationary storage structures would also play a part in demand.
Zhao forecasts that the demand for electric vehicles will increase by 20% worldwide. Still, she believes this year’s growth will be slightly less rapid than in 2017.
“One of the reasons we expect EV growth to be slower this year [is] because last year was a very high base.”
Matty Zhao, Bank of America Securities’ head of Asia Pacific basic materials (via CNBC)
She anticipates that the price of lithium in China will hover around 400,000 yuan per ton on average but will fall to a range between 350,000 and 400,000 yuan soon. According to CNBC, the price per ton of lithium carbonate has been hovering close to 382,500 yuan.
See Also:
- Iran claims to have found the world’s second-largest lithium deposit
- EV demand triples Lithium Miner SQM’s profit
- Three Southeast Asian countries are competing for China’s BYD plant
- Albemarle expects spike in lithium demand, as Chinese EV market expected to grow 40%
- BYD plans to build another $1.2 billion EV battery plant in China, per filings
