Roskill: Lithium prices to continue slide despite forecast supply disruptions and strong demand growth

London: U.K, July 17, 2019 (GLOBE NEWSWIRE) — Though spot prices for lithium compounds have been in a prolonged decline, long-term contract prices, estimated to represent over 75% of lithium trade globally, have experienced a different trend. Contract prices for battery-grade lithium carbonate increased throughout 2018, reaching a peak of US$14.86/kg before falling back to US$14.02/kg in Q1 2019. Prices for lithium hydroxide have displaced a similar trend whilst maintaining a healthy premium over lithium carbonate. Roskill’s Lithium: Market Outlook to 2028 explores how prices will perform as the industry expands rapidly in the years to 2028, detailing the relationship between lithium mineral concentrates, compounds and downstream products.   Commissioning of new supply pushes market into oversupply   The oversupply of mined lithium products, caused largely by the commissioning of lithium mineral operations in Australia outpacing mineral/chemical conversion capacity in China has been a major influence on falling lithium prices since Q1-2018. Reported production capacity increased 54% to over 700ktpy LCE in 2018, though not all is considered effective capacity. The commissioning of four lithium mineral projects in Australia and Brazil, coupled with the ramp-up of production at several existing brine and mineral operations was responsible for the increase in capacity.           In response to falling prices, increasing supply and lacklustre demand growth from partners in China, Australian upstream lithium players have pulled back on chemical-grade concentrate shipments and/or production schedules. Such an oversupply may orchestrate an extended period of production curtailment as producers return to being ‘demand responsive’, versus the current ‘demand anticipation’ state of play. Aspiring developers’ access to capital could also be impacted as suppressed prices will drive down feasibility study economics.   Consequently, established miners may prove to be swing players in dictating the opportunity/necessity for new market entrants in the short-medium term based on how they manage the supply surplus.   Rechargeable battery market growth altering material demand   Demand growth for lithium has been significant since 2015, increasing 13%py, driven by the use of lithium-ion battery technologies in automotive, portable electronic and energy storage applications. Demand from rechargeable batteries exceeded 144kt LCE in 2018 and is forecast to increase more than six-fold by 2028. The shift to higher nickel cathode materials in lithium-ion batteries is expected to accelerate demand for lithium hydroxide, as opposed to lithium carbonate, with battery grade hydroxide demand forecast to grow by 35%py through to 2028, compared to 14%py for battery grade carbonate.    Roskill’s Lithium: Outlook to 2028 report was published in July 2019. Click here to download the brochure or sample pages or access further information