In this list
Electric Power | Metals

Commodities 2023: Lithium prices likely to see support from tight supply, bullish EV demand

Commodities | Energy | Coronavirus | Oil Risk | LNG | Natural Gas | Coal | Electricity | Metals

Coronavirus and Commodities

Electric Power | Electricity | Energy | Energy Transition

European Long-Term Power Forecast

Energy | Oil | Energy Transition

APPEC 2023

Agriculture | Energy | Energy Transition | Oil | Electric Power | Natural Gas | Biofuels | Renewables | Refined Products | Jet Fuel | Hydrogen | Electricity

INTERVIEW: UK's LCCC anticipates AR5 process improvements, new CFD markets

Energy | Coal | Energy Transition | Thermal Coal | Renewables | Coking Coal

China's hunger for coal sparks debate on self-sufficiency and imports

For full access to real-time updates, breaking news, analysis, pricing and data visualization subscribe today.

Subscribe Now

Commodities 2023: Lithium prices likely to see support from tight supply, bullish EV demand


Market seen remaining tight, limiting price declines

Carbonate price to decline 10% on year in 2023: MI

  • Author
  • Jacqueline Holman    Jesline Tang    Leah Chen
  • Editor
  • James Leech
  • Commodity
  • Electric Power Metals
  • Tags
  • Battery Materials Lithium
  • Topic
  • Battery Metals Commodities 2023 Energy Transition Environment and Sustainability

Lithium prices will likely see strong support in 2023, with supply expected to remain tight amid bullish demand from the accelerating adoption of electric vehicles across the globe, though some price correction could be expected, led by a slowdown in the Chinese market, market participants told S&P Global Commodity Insights.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

With EV adoption picking up, some industry experts predict the gap between lithium demand and supply will remain or even widen in 2023.

Prices are expected to remain at current levels for the next few years, said John Walker, CEO of Alkemy Capital Investments' 100%-owned subsidiary Tees Valley Lithium, or TVL.

"While some normalization of current high spot prices is possible, on the contract side, we believe that the market will remain tight in 2023, with insufficient supply coming on stream," Vulcan Energy Resources CEO and Managing Director Francis Wedin said.

Related content: EV sales momentum to face challenges in 2023, but long-term expectations unaffected

Chilean lithium producer SQM executives in a quarterly conference call Nov. 17 said it had ruled out locking in fixed lithium prices as it negotiates long-term supply contacts with consumers, confident that surging EV demand would keep the market tight. The company said it will continue to use indexed contracts to benchmark its prices, saying this was "the healthiest way to contract product."

Platts, part of S&P Global Commodity Insights, assessed seaborne lithium carbonate and lithium hydroxide at $75,000/mt CIF North Asia and $81,000/mt CIF North Asia Dec. 20, up 122% and 156%, respectively, since the start of 2022.

A survey of Asian market participants presented a more conservative view of lithium prices. More than half of the 26 companies expected Chinese lithium prices to average below Yuan 500,000/mt in 2023 and North Asian lithium prices to average below $70,000/mt, according to the latest Platts' Battery Metals Outlook Survey.

Chinese lithium prices briefly touched the Yuan 600,000/mt mark in early November due to power cuts and pandemic controls in key producing provinces such as Sichuan and Jiangxi. In the same period, Pilbara Minerals' spodumene auctions continued to refresh new highs, reaching a record $7,805/mt at its Nov. 14 auction, which also boosted market sentiment.

Prices have since declined on the back of downstream precursor and battery maker production cuts, a stark contrast to the same quarter last year when demand boomed.

Platts assessed Chinese domestic lithium carbonate and lithium hydroxide at Yuan 548,000/mt DDP China and Yuan 555,000/mt DDP China Dec. 20, up 94% and 155%, respectively, since the start of 2022.

Around 58% of respondents expected the removal of Chinese EV subsidies to slow down overall EV sales in 2023, as skyrocketing lithium prices saw battery pack costs increase for the first time in over a decade.

"Sales will increase, but the pace of increase may slow down," a Chinese battery maker said.

Upstream, participants were divided on whether prices of spodumene concentrate -- a key raw material for lithium salt production -- would continue to hover at high levels in 2023, with many deeming current levels unsustainable amid falling salt prices.

About 46% believed prices will continue to hover at high levels, while 39% believed otherwise with newer projects coming online.

One miner said the deficit was here to stay, though it "should start to ease away from the recent acute shortage phase we have experienced."

Soaring lithium prices have paved the way for alternative chemistries such as sodium-ion batteries, and while this has gained some traction in China, 73% of respondents said this would not pose a significant threat to lithium demand.

Looming surplus?

Looking ahead, market sources were split on whether supply would catch up with demand in 2023.

S&P Global Market Intelligence's Metals and Mining Research forecasts lithium chemical supply at 858,000 mt of lithium carbonate equivalent in 2023, up from the 668,000 mt forecast for 2022, while LCE demand was forecast at 856,000 mt , up from 684,000 mt in 2022. This would put the market in a small surplus of 2,000 mt in 2023, improving from a deficit of 15,000 mt in 2022.

In its November report, MI forecast the average lithium carbonate price will fall 10% year on year in 2023 to $45,833/mt CIF Asia with the growing supply.

Senior Analyst Alice Yu said that, at above $40,000/mt, the price forecast was still three to five times higher than prices over 2019-2021.

"However, while the market may be more 'balanced' than the extreme scenario that appears to have existed in 2022, there is still risk for a meaningful deficit in our opinion given the challenges associated with either expanded existing supply projects, or commissioning and ramping up production at new projects," Savannah Resources' CEO Dale Ferguson said, adding that Savannah expected the market to remain "extremely tight" through to 2024.

In the longer term, market players remained bullish, citing supply constraints and the massive demand for lithium salts as two main factors.

"Even assuming that all newly planned lithium projects come on stream with no delays, we still see a supply-demand gap, given the stated targets of OEMs and battery manufacturers, driven by government targets and customer demand for EVs," Wedin said.

Many shared the view that the global lithium market would remain tightly balanced, limiting lithium's price decline into 2023.

Platts spoke to 26 companies for the survey, comprising domestic and international lithium miners, producers, consumers and analysts.