Salt evaporation ponds seen on Bristol Dry Lake where Standard Lithium Ltd. is preparing to make use of Direct Lithium Extraction (DLE) technology to capture lithium from brine on November 30, 2022 near Amboy, California
David Mcnew | Getty Images News | Getty Images
There might be a surplus of lithium in 2023 as higher supply volumes are set to supersede slowing demand for the metal, said Bank of America Securities’ head of Asia Pacific basic materials, Matty Zhao.
“We see quite a lot of supply coming out from lithium mines … We expect 38% lithium supply growth this yr. That is why 2023 is prone to turn right into a surplus yr for lithium,” Zhao told CNBC.
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She also said she expects China’s electric vehicle demand growth to slow from 95% last yr to 22% this yr. Lithium is a key component of EV batteries, which Zhao said is becoming an increasingly competitive industry.
Since 2021, elevated lithium prices have incentivized adding recent supply streams, equivalent to Pilbara Minerals’ Ngungaju Plant in Pilgangoora, Albermarle’s Wodgina mine and Tianqi Lithium’s Greenbushes mine, in response to Zhao.
“Meanwhile, existing capacities like Sociedad Química y Minera’s Salar de Atacama, Mineral Resources’ Mt. Marion are expanding aggressively as well,” she said.
Within the two years ending December 2021, lithium carbonate spot prices rose 5% to face at 277,500 yuan per ton. But subsequently surged to a record high of virtually 600,000 yuan per ton in November 2022, greater than 12 times January 2021 prices.
In May last yr, Goldman Sachs forecast lithium supply to grow on average 33% annually between 2022 and 2025.
“We expect Chinese lithium project expansions to multiply rapidly, specifically integrated hard rock projects, just as ex-China spodumene supply continues to strengthen,” the bank’s analysts wrote. The firm also said accelerating EV sales and stationary storage installations will even contribute to demand.
While Zhao still sees EV demand growing 20% globally, she said it’ll be barely slower than last yr’s pace.
“One in all the explanations we expect EV growth to be slower this yr [is] because last yr was a really high base,” she said.
She expects lithium prices in China to average around 400,000 yuan per ton, before dropping to between 350,000 yuan to 400,000 yuan within the near term.
Lithium carbonate prices have recently been trading around 382,500 yuan per ton.
