Against the backdrop of soaring new energy vehicle sales, lithium supply is expected to remain tight until the second half of 2022, according to a recent research note by CITIC Securities.
Lithium supply growth this year and next year will mainly be from South American salt lake lithium extraction capacity, including ALB, SQM, and Ganfeng Lithium’s expansion project, but the above capacity won’t form effective supply until the second half of 2022, the note said.
The lithium market is still in a tight supply situation in the second half of the year, and lithium prices are expected to rise in addition to a significant increment in demand, and factors such as the tight supply of spot resources and scarcity of supply on the raw material side will also lead to abnormal price fluctuations, said Qu Yinfei, a lithium analyst with Mysteel Group’s new energy division, as quoted by the Securities Daily on Thursday.
Qu expects new energy vehicle sales to grow exponentially in 2021, making lithium prices continue to rise. And currently, only salt lakes still have some inventory, with ore smelters inventory hovering at low levels.
According to the CCA data, China’s new energy vehicle production and sales have exceeded 1.2 million units in January-June this year.
Cui Dongshu, secretary-general of the China Association of Passenger Transport, said that the rapid expansion of demand for new energy vehicles, to a certain extent exacerbated the impact of the “battery shortage”, resulting in a collective wave of price increases in upstream raw materials resources.
Lithium carbonate prices are expected to reach RMB 180,000 ($27,733) per ton in the second half of the year, the same as the previous record high, according to a recent research report released by Guotai Junan Securities.
The current price of battery-grade lithium carbonate rose to around RMB 90,000 per ton, the first increase after three months of lithium carbonate silence, marking the second round of lithium price increases, the report said.
The report said that tight supply and demand in the lithium industry will intensify and may enter a “hard shortage” in the second half of the year.