Lithium Continues to Decline
With lesser demand anticipated and a consistent supply hoped for. Lithium carbonate prices in China dropped to CNY 567,500 per tonne. A 5% down from the record-high of CNY 597,500. This increased the likelihood that the lithium market could return to a surplus in 2023.
The demand for the primary raw material will decline dramatically as a result of Chinese authorities’ planned cancellation of new energy subsidies for battery producers in January.
Additionally, local Chinese governments will probably stop providing cash incentives and tax advantages to residents who buy electric vehicles, which is anticipated to drastically reduce sales of electric vehicles in the world’s largest consumer.
In order to counteract China’s supply constraints, mining behemoths kept securing contracts in Australia and South America. Nevertheless, despite a decline since mid-November, China’s decarbonization initiatives and a surge in sales of electric vehicles propelled lithium prices to jump 105% year to date.
Although it’s difficult to predict, increased lithium prices will probably have a favorable effect on the economy. Since lithium is a crucial metal for many industrial and technological applications, firms and consumers will probably start seeking for methods to use more of it as its price rises. This might result in more jobs and more output in the lithium sector, which would be advantageous for the economy.
More About Lithium
Lithium is a microcosm of the overall market in many aspects (but not exclusively) (stock market, commodities markets, etc). People noticed a rise in demand as cars became more electric. The spot price increased as EV companies raced to “lock in” their longer-term supplies, which they largely succeeded in doing. The reality of EV growth did not exactly correspond to the notion of EV growth. Around the same time that new suppliers entered the market, buyers (EV and battery makers) discovered they had sufficient supplies of lithium.
The present price spike for lithium is a secondary indication of fundamental energy issues and the recovery of economic activity following the COVID slowdowns, even though lithium is perhaps crucial to modern battery technology. Russian energy manipulation in Europe is aggravating some energy-related issues. It’s challenging to pinpoint the precise reason why greater Lithium prices should result from this.
One of the most prevalent elements in the crust of the Earth is lithium. Although there have long been plans and initiatives to open new facilities. There have been alarming headlines about the modern electronics industry’s reliance on China since approximately six or seven years ago. Early in 2022, there will certainly be a squeeze between the traditional reliance on China and the avalanche of new supplies, which will likely drive prices back down to earlier levels. The Russian shenanigans and COVID resuming issues aren’t helping.
