"Lithium price surge unlikely to return, says Fitch Solutions"

" \r\n \r\n \r\n \r\n \r\n \r\n\r\n Lithium price surge unlikely to return, says Fitch Solutions \r\n\r\nThe lithium market has entered a \u201cnew normal\u201d period of stability with sustained price surges a thing of the past, analysts at FitchSolutions BMI said in a webcast Thursday.\r\n\r\nFalling lithium prices in the past year means prices are expected to remain downcast for the next decade, Sabrin Chowdhury, head of BMI commodities analysis, said from Singapore. This outlook is reshaping the industry landscape, presenting opportunities and challenges for major producers and junior developers.\r\n\r\n\u201cThis stabilization is primarily due to a rapidly expanding global supply, which has already pushed the market into surplus,\u201d Chowdhury said. \u201cWe expect no return to previous highs for lithium. Prices will remain below the peaks of 2022 and 2023 for at least five to 10 years.\u201d\r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\nFor this year, BMI forecasts mainland Chinese 99.5% lithium carbonate prices to average $15,500 per tonne, increasing to $20,000 per tonne in 2025. This starkly contrasts with the over $72,000 per tonne average in 2022. Similarly, BMI predicts lithium hydroxide monohydrate (56.5% grade) to average $14,000 per tonne this year and $20,500 in 2025, down from about $70,000 per tonne in 2022.\r\n\r\nThe upshot of extended low lithium prices could be a boon for cost-saving methods and industry M&A, the analysts said. Juniors and developers may have to incorporate new technology, such as direct lithium extraction for brine projects, while the industry\u2019s scores of operators will likely face consolidation.\r\n\r\n\u201cOut of 164 total operations in our database, 126 individual companies own these projects,\u201d BMI metals and mining analyst Amelia Haines said on the call. \u201cThis creates an optimal environment for mergers and acquisitions, with larger, well-funded miners looking to acquire promising lithium assets to meet growing demand.\u201d\r\n Competitive edge \r\nTechnological advancements are poised to impact supply and demand and are fundamental in gaining a competitive edge for entrants to the cutthroat market, the analysts said.\r\n\r\n\u201cRelatively new direct lithium extraction technology can potentially reduce production times and environmental impact compared with traditional methods,\u201d senior metals and mining analyst Olga Savina said.\r\n\r\nDespite the price decline, many major producers continue to remain profitable. This is mainly owing to their ability to maintain low production costs. In Australia, for instance, the production cost of mining spodumene is significantly lower for projects like Tianqi Lithium and IGO\u2019s (ASX: IGO) joint Greenbushes mine and Pilbara Minerals\u2018 (ASX: PLS) Pilgangoora. Higher-cost producers Galaxy Resources, Altura Mining and Nemaska Lithium had to curtail production or go bust.\r\n\r\nLithium demand is set to continue its vigorous growth, driven mainly by the electric vehicle (EV) sector. However, advancements in battery technologies, including the rise of lithium-iron-phosphate (LFP) batteries and potential breakthroughs in solid-state batteries, could influence needs, the analysts said.\r\n\r\nGlobal lithium demand from EVs is expected to increase by about 14% in 2024 and 2025. The EV sector is expected to account for most of the lithium demand, with worldwide passenger EV sales forecast to reach 17.6 million units in 2024, representing a 21.3% year-on-year growth.\r\n\r\n\u201cWe expect global lithium production to grow by 16.4% year over year in 2024 to 1.12 million tonnes lithium carbonate equivalent (LCE) and by 19.7% in 2025 to 1.35 million tonnes LCE,\u201d Savina said.\r\n\r\nBy 2028, global lithium mine production and demand are projected to reach an equilibrium at about 1.9 million tonnes, with demand set to overtake supply thereafter.\r\n Australasia \r\nAustralia and mainland China will be the primary drivers of this growth. Australia, already a leading hard-rock lithium producer, will continue to dominate due to its strong project pipeline, BMI said. Mainland China will keep importing lithium for its battery industry while expanding its domestic production capacity and securing supplies by developing projects overseas.\r\n\r\nEmerging players like Argentina and Zimbabwe are also expected to contribute significantly to the global supply.\r\n\r\n\u201cArgentina\u2019s growth in the lithium sector looks promising as several major projects begin operation,\u201d Savina said.\r\n\r\nMajor economies are implementing several measures to achieve critical mineral supply chain resilience. These measures aim to reduce external risks and ensure a stable supply of lithium for the green energy transition, Haines said.\r\n\r\nThe United States Inflation Reduction Act provides tax credits for EVs that use critical minerals mined domestically or in markets with free-trade agreements with the US. This has spurred significant investment in lithium projects across North and Latin America, including Argentina, Canada and the US.\r\n\r\nThe European Union\u2019s Critical Raw Materials Act aims to build onshore production capacity and promote import diversification. Europe has lithium resources across several countries including Portugal, the Czech Republic and Finland.\r\n\r\n\u201cOnshoring mineral production and processing capacity, enhancing recycling capabilities, forming strategic partnerships, and diversifying supply chains are crucial strategies,\u201d Haines said. \u201cThese measures aim to reduce external risks and ensure a stable lithium supply for the green energy transition.\u201d\r\n\r\n \r\n \r\n \r\n "

"Lithium price surge unlikely to return, says Fitch Solutions"

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