Global lithium prices become attractive again despite surplus – analyst

Chile's lithium export revenues are expected to decline this year – as they did in 2023 – due to falling prices, but values ​​are expected to become attractive again by 2030.

This year, Chile is expected to produce 275,000 tonnes of lithium carbonate equivalent (LCE), up 2 percent. According to a report by the Cochilco copper commission, exports through May totalled US$1.59 billion, down 65 percent from a year ago, due to lower prices.

You can find the report in the “Documents” field in the upper right corner.

Lithium carbonate (99.2%) prices were around USD 9,800/t during the week, down about 15% from the previous month.

With several projects coming online around the world, the downward trend is expected to continue until 2027.

“Production will increase between 2026 and 2027. A surplus is expected in 2028 and 2029, followed by a deficit in 2030. This will lead to a price increase from USD 14,000/t to USD 36,000/t and an average of USD 25,000/t in the following years,” said Juan Esteban Fuentes, market expert at consultancy Benchmark, at an event hosted by mining think tank Cesco in Santiago.

The supply bottleneck results from the increased production of batteries, cathode materials, electrolytes, anodes, solar modules and other downstream products for electromobility, especially in China, due to the global energy transition.

Falling prices have forced companies to change their production plans after experiencing a boom in 2022 and 2023 when LCE was fetching $70,000-80,000 per tonne.

The lower prices are due to weak sales of electric vehicles, stronger sales of hybrid cars that use smaller batteries with less lithium, and the emergence of new manufacturers, according to Cochilco.

EXCESS

This year, global LCE production will reach 1.25 million tonnes, compared to 988,000 tonnes last year. Demand is expected to reach 1.13 million tonnes.

Next year, 1.59 million tons will be produced and 1.40 million tons will be needed, Cochilco said.

The surplus will be 117,000 tonnes this year and 191,000 tonnes next year.

With production of 172,000 tonnes in 2015 and demand of 191,000 tonnes, the annual growth rate until 2024 is 25%.

During the same period, the number of lithium activities increased from 20 in eight countries to 62 in 14 countries, with 80 projects expected by the end of the year. China, Australia and Argentina will contribute around 700,000 t/year of LCE, according to Fuentes.

The global portfolio includes 150 projects; in 2034, production is expected to reach 2.6 million tonnes from 29 countries.

DEMAND

Demand is driven by EV batteries as combustion engines are phased out.

The IEA predicts that the electric vehicle fleet will reach 245 million in 2030, meaning that one in six vehicles will be electric. By 2035, the number will rise to 505 million, meaning that one in three vehicles will be electric.

Marcos Lima, former CEO of Chilean state-owned mining company Codelco and now a partner at Cis Consultores, told BNamericas that given the growing market, companies should analyze their sales plans and “examine with interest the diversification of their customer portfolio.”

CHILE-ARGENTINA

Seven projects are expected to be implemented in Chile, including expansions of SQM and Albemarle operations in the Salar de Atacama.

This number could increase once the national lithium strategy is consolidated.

According to the Ministry of Economy, there are 38 lithium projects in advanced stages in Argentina with a potential capacity of 464,420 t/year LCE.

Two plants produced 50,659 tonnes of LCE last year, while seven plants are expected to start production by the end of the year, the Rosario Stock Exchange reported in April.

Chile is the world's second largest producer and Argentina is in fourth place, with Argentina's position forecast to improve by 2030.