An ongoing avalanche of lithium supply, coming mostly from Australia, as well as cuts to China’s electric-vehicles (EVs) subsidies, is set to keep prices for the coveted battery metal in the single digits for longer than expected, analysts at commodity research group CRU warn.
Prices for lithium carbonate, the most common type used in the batteries that power electric cars, doubled over 2016 and 2017, but have fallen by more than 40% over the past year, crashing through the $10/kg mark at the end of July.
While many market players continue to forecast long-run prices in the mid-teens, based on bullish forecasts for sales of EVs and energy storage systems, CRU analysts remain unconvinced.
Based on previous experience in other commodities, the experts believe that “hype” has met “reality,” adding that refinery bottlenecks and the potential for ramp-up delays in the mining and refining sectors are not enough reasons to forecast a quick price recovery.
CRU says that lithium prices will continue to be governed by cost fundamentals, which will keep them in the single-figures. “This is the same message we have continually conveyed to CRU clients since November 2017,” analysts say.
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