March 8, 2023: There could be an addition of lithium in 2023 as higher supply volumes are set to replace slowing demand for the metal, stated Bank of America Securities’ head of Asia Pacific basic things, Matty Zhao.
“We see a lot of supply coming out from lithium mines. We expect 38% lithium supply growth this year. That’s why 2023 will likely become a surplus year for lithium,” Zhao said.
She also said China’s electric vehicle demand growth would slow from 95% last year to 22% this year. Lithium is a critical material of EV batteries, which Zhao stated is becoming a competitive industry.
Since 2021, high lithium costs have incentivized adding new supply streams, like Pilbara Minerals’ Ngungaju Plant in Pilgangoora, Albermarle’s Wodgina mine and Tianqi Lithium’s Greenbushes mine, Zhao state.
“Meanwhile, capability capacities such as Sociedad Química y Minera’s Salar de Atacama, Mineral Resources’ Mt. Marion are also expanding aggressively,” she said.
In the dual years ending December 2021, lithium carbonate spot prices rose 5% to 277,500 yuan per ton. But they subsequently increased to a record high of almost 600,000 yuan per ton, over 12 times January 2021 prices.
In May last year, Goldman Sachs forecasted lithium supply to grow on average 33% annually between 2022 and 2025.
“We anticipate Chinese lithium project expanding to multiply rapidly, particularly integrated hard rock projects, just as ex-China spodumene supply keeps strengthening,” the bank’s analysts wrote. The firm said accelerating EV sales and stationary storage installations will increase demand.
While Zhao still sees EV demand increasing by 20% internationally, she said it’d be slightly slower than last year’s pace.
“One of the reasons we anticipated EV growth to be slower this year is because in the previous year was a very high base,” she said.
She expects lithium costs in China to average nearly 400,000 yuan per ton before decreasing to between 350,000 yuan to 400,000 yuan in the closer term.
Lithium carbonate rates have been trading at around 382,500 yuan per ton.
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