L R AS Published on Sunday 1 October 2023 - n° 459 - Categories:battery materials
Sharp fall in lithium prices in 2023, boosting vehicle sales
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The price of lithium has plummeted after rising sharply between 2020 and 2022. This had taken the price to RMB 600,000 per tonne of lithium carbonate (€77,990). It has now fallen back to RMB 169,500 (€22,033).
This reflects the economic slowdown and the reduction in public subsidies. It is reducing sales of electric cars. Battery stocks are rising as a result. It is also the consequence of an 80% increase in production between 2020 and 2022, notes the International Energy Agency (IEA). "Projects announced to increase lithium extraction capacity rose by 14% between the end of 2022 and the second quarter of 2023", the agency points out.
Securing the supply of lithium has become a priority for companies in Asia, Europe and North America. It is encouraging strategic alliances and joint ventures between carmakers and mining companies. A number of mining projects are currently being developed or explored in Australia, Austria, Brazil, Canada, China, the Democratic Republic of Congo (DRC), the Czech Republic, Ethiopia, Finland, Germany, France, Italy, the Netherlands, Portugal, Spain, Sweden and the United Kingdom.thiopia, Finland, Germany, Ghana, Kazakhstan, Mali, Namibia, Nigeria, Peru, Portugal, Russia, Serbia, Spain, Thailand, the United States and Zimbabwe, as listed by the United States Geological Survey (USGS).
According to the IEA, the supply of metals based on announced extraction projects would make it possible to meet around 90% of demand in 2030 for copper, 80% for nickel, 85% for cobalt, but barely 65% for lithium.
We therefore need to increase lithium production and invest in it. France has just signed two bilateral agreements with Australia and Canada.
"Capital expenditure on the development of critical minerals has been increased by 20% in 2021 and a further 30% in 2022. Exploration expenditure has also risen by 20% in 2022, thanks to record growth in lithium exploration", the IEA points out. But this is still not enough, particularly to reduce the concentration of supply of strategic metals and increase the diversification of supply sources. Today, just three countries account for some 90% of the world's lithium mine production: Australia, Chile and China. China accounts for half of all lithium refining projects. Indonesia will have almost 90% of future nickel smelters," she points out.
Chinese companies are working hard to secure access to lithium. Lithium is used in batteries for electric vehicles, mobile phones, renewable energies, supercomputers, etc.
China's strategy is a response to the need for battery manufacturers to integrate vertically in order to reduce the volatility of prices for strategic metals and, above all, to be able to meet the needs of the Chinese market. Battery production in China has almost quintupled between 2020 and 2022, and the penetration rate of electric vehicles in the country has reached 15% in 2021 and 27% in 2022.
La Tribune, 28 September 2023
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Weak demand in the power and energy storage sectors has put pressure on lithium salt prices, which fell to an average of RMB 230,000/tonne in August, down 20% quarter-on-quarter. TrendForce warns that prices could fall to below RMB 200,000/tonne, making buyers increasingly reluctant to make purchases.
As lithium salt is an upstream component in the lithium battery industrial chain, fluctuations in its price affect the profitability landscape of the entire chain. With the sharp fall in lithium salt prices, profit margins for lithium salt producers have been considerably reduced.
As upstream lithium prices fall, the prices of raw materials for lithium batteries such as LFP will also fall accordingly, reducing the cost of lithium batteries. Lower prices for lithium raw materials have led to improved profitability for battery manufacturers and carmakers.
TrendForce of 27 September 2023
