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With lithium prices tanking nearly 60% so far this year, international Lithium expert Joe Lowry says the market isn’t reflecting the reality and blames China for using a “false narrative” to manipulate prices lower as a supply squeeze looms large.
“Everybody knows they have a lithium problem and we’ve seen this year at the beginning of the year, extreme volatility in the China spot market,” Lowry told a conference in Singapore, as reported by Stockhead.
“I think you’re going to see volatility in the lithium space going forward. I believe honestly, that China’s tried to create a false narrative to talk the lithium price down. It’s going to be interesting, but … the way I look at the numbers we’re in a shortage for the rest of this decade,” he added.
China accounts for a large part of the global lithium supply and dominates the global lithium-ion battery supply chain.
On Thursday, China’s key lithium hub saw companies reduce lithium output amid a price collapse and what appears to be weaker electric vehicle demand. Media said major producers were among those who had reduced production; however, none of the producers was named.
Downstream buyers (such as battery factories) are now uncertain as to whether they want to invest in more supplies because the new narrative is that EV outlook isn’t as strong as it was earlier anticipated, and a supply glut is looming.
That has sent prices of lithium carbonate plunging to the point that all of last year’s gains have been lost.
Caixin Global says lithium carbonate has shed 57% so far, and down more than 60% from November.
Lowry says none of this should be true, estimating that we will need 3.7 million tonnes of lithium by 2030 and it “would take 25 world class brine projects to come online in three years” to make that happen.
“That would take 25 world-class brine projects to come online in three years. I promise you that is not going to happen,” he was cited as telling the conference, adding that while there may be “mismatches” between supply and demand and pricing, “the long-term lithium price is going to trend towards high and not low”.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com