Lithium Prices Drop Over 20% in 2024 but Slowdown in Decline Offers Stability Hopes
Lithium prices, crucial for electric vehicle (EV) batteries, have seen a sharp decline of more than 20% so far in 2024, but analysts suggest the market may stabilize due to the demand-supply balance.
As of Monday, lithium carbonate prices on the Guangzhou Futures Exchange (Gfex) closed at 75,200 yuan ($10,571.5) per tonne, down by 3,050 yuan. This marks a significant drop from the peak of 5.75 million yuan ($808,299) in December 2022.
The Australian Office of the Chief Economist (AOCE) pointed out that a rise in global lithium supply, particularly from producers like China, Australia, Argentina, and Zimbabwe, has led to overcapacity. This, coupled with slower-than-expected growth in EV sales, has contributed to the price drop.
Despite the current market surplus, a slight price rebound was seen last week, indicating a potential for stabilization as producers hold off on selling at lower prices and cathode manufacturers replenish inventories.
EV sales increased by 20% in the first half of 2023, but the rapid expansion in lithium production has pushed the market into surplus. BMI, a research agency under Fitch Solutions, forecasts that lithium prices will remain below the 2022-2023 highs, with Chinese lithium carbonate expected to average $15,500 per tonne in 2024.
Analysts believe any significant rise in lithium prices could prompt producers to focus on hedging, which might lead to another round of price declines as the market adjusts to demand fluctuations.
