The exponential surge in demand for electric vehicles has led to lithium prices reaching an all-time high. According to Shanghai metals market statistics, the average price of battery grade lithium carbonate is USD 73,060 per tonne, up 2.8 times over last year.

Supply:

To put it simply, the supply is unable to keep up with the rising demand. The interruptions to global supply chains caused by the Covid 19 epidemic, as well as the subsequent Russia-Ukraine war, have resulted in a deficit in lithium manufacturing. According to the US Geological Supply, only a handful mines in Australia, Argentina, China, and China will account for most of the Lithium supply in 2021.

Lithium is often mined from two types of mines: brine deposits, which are saline ground water enriched with lithium. The other route is through hard rocks, where lithium may be discovered as a component of minerals housed in pegmatites. The supply is so far behind that the market may require nine new mines or expansions to fulfil the expanding demand, which rises higher each year.

Because of the extreme heat waves in Sichuan in August, the government required the mines to close for two weeks to provide enough electricity to fulfil air-conditioning demands. Similarly, during the future hard winters, China may confront electricity shortages.

So, what holds for the Lithium price in the future?

Because of the scarcity of lithium and the continuous development in EVs, lithium prices will continue to climb. However, there are still worries of a recession and a bear market in equities, and because lithium is used in everything from electronics to electric vehicles, a slowing economy might cause prices to fall in the near term. According to trade economics, the price of lithium carbonate in China is expected to climb in the next 12 months. Although everything appears to be going well for lithium metal in the long run, whether we are in the lithium super cycle has yet to be decided.

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Written By: Thegoldstocks.com

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