If you’re investment portfolio is not exposed to lithium, a key metal in the batteries which power electric vehicles (EVs), then consider the price effect on a commodity said to be heading for a “perpetual deficit.”
That remarkable description of surging demand for lithium as EV sales accelerate incorporates the second price driver, a lack of supply response from the world’s major lithium miners.
Two investment banks this week upgraded their assessment of lithium in light of the increasing demand and sluggish supply growth with both upgrading their price forecasts for the metal.
Macquarie Bank was first to alert clients about how the lithium market is emerging faster than expected from a slowdown which started in 2018, triggering a 75% fall in the price of lithium hydroxide from $20,000 a ton to around $5,000/t at this time last year.
Since that low point was reached, lithium has recovered to around $10,000/t, but remains below what produces require to “incentivize” investment in restoring mothballed mines and processing plants or invest in new projects.