Lithium Market

Demand

Historic

Roskill estimated in their report Lithium Market outlook to 2017-12th Edition, 2013,  that total global demand was 150,200t LCE in 2012 up from 68,000t LCE in 2000 showing an average annual growth rate of 6.8%.

The glass and ceramics industries have historically been the biggest consumers of lithium. Since 2000, rechargeable batteries have been increasingly important, growing from 4% to 27% of total consumption. This has been driven by the adoption of lithium ion technologies in consumer electronics and the emergence of products including tablets and smart phones.

Present and future

In their report Roskill forecasted the medium term outlook for lithium consumption as strong with a base case overall growth rate at just under 10% per annum.

Furthermore, a high case scenario of surging demand for lithium secondary batteries in electric vehicles and stronger global economic growth could result in an average growth rate of almost 16% per annum.

Stormcrow estimated demand in 2015 at 200kt LCE and projects demand at 300kt LCE in 2020 and 400kt LCE in 2025.

Most of the large car manufacturers are launching models that integrate lithium ion battery technology whilst Tesla is aiming to bring electric vehicles to the mass market by lowering costs and entering into battery manufacture with their ‘Gigfactory’ in Nevada which will initially produce 500,000 units per annum.

It will invariably take time for leading car manufacturers and society to adopt electric vehicles to a point which will impact the lithium market. However, there is growing concern by governments  to take action to reduce global warming and pollution of cities by use of fossil fuels and the adoption of electric vehicles can play a significant role. The market for lithium ion batteries has grown markedly following the adoption by consumer technologies – and car batteries require substantially more lithium to power electric vehicles.

Increased use of lithium ion batteries for heavy duty power storage particularly linked to sources of renewable energy off-grid was also projected by Roskill. The increasing use of lithium-aluminium alloys in aircraft manufacture to lighten weight and improve fuel efficiency has good growth potential.

A high case scenario of surging demand for lithium secondary batteries in electric vehicles and stronger global economic growth results in an average growth rate of almost 16% per annum

Supply

Roskill estimated in their report that in 2012 the total production of lithium was approximately 168,000t (LCE). There are four major lithium producers globally with three being brine producers and one hard rock producer. These “big four” according to Roskill accounted for approximately 82% of world lithium production in 2012.

Since 2012, There has been a noticeable increase in corporate activity in the lithium sector with a number of companies looking to consolidate their supply sources given the favourable forecasts for lithium in the foreseeable future. Also, strategic end users are seeking to secure supply by taking equity positions and arranging offtake agreements with potential producers of lithium.

Price

The pricing of lithium is negotiated off-market and based on customer specifications with price information rarely reported. Higher purity lithium products that include certain battery products carry a premium over technical grade lithium.

According to Roskill, prices for technical grade lithium carbonate increased from US$2,187/tonne in 2004 to US$5,288/tonne in 2012. Roskill expected prices to continue to rise in the foreseeable future as new markets and applications are found for lithium products. Their base case forecasts US$6,900 in 2017. The high case scenario, with more rapid take up of electric vehicles, sees a lithium carbonate price of US$7,800 for technical grade in 2017 with battery grade commanding a US$500/tonne premium.

Stop prices in China for lithium hydroxide and lithium carbonate increased markedly in 2015/2016 reaching the US$15,000-20,000/tonne range due to supply constraints. Spot prices have declined recently and are trending towards US$10,000/tonne.

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