After reaching new heights in 2022, lithium prices have cooled off in 2023. Will they bounce back as lithium demand continues to grow?
According to the Resources & Energy Quarterly: June 2023, lithium peaked in November 2022, with spodumene concentrate (SC6%, CIF China) and lithium hydroxide (delivered to China) prices averaging $US6100 per tonne (t) and $US78,950/t that month, respectively.
The Shanghai Metals Market observed the spodumene concentrate (SC6%, CIF China) price to be $US4030/t on June 30, while on the same day lithium hydroxide was trading at $US46,900/t on the London Metal Exchange (LME).
While the demand trajectory is strong for lithium, the Resources & Energy Quarterly doesn’t expect prices to return to the heights of 2022. The Australian Government report forecast lithium prices to “remain elevated” this year, but in 2024 and 2025 prices are predicted to “decline significantly”.
The report stated that while demand is expected to grow at continued high rates, the allure of growing demand and high prices has driven an acceleration in lithium supply growth.
This is not only due to new mines coming online but also mine expansions.
“Australia leads global lithium extraction, and mine production is forecast to continue growing,” the report stated.
“Mine production of spodumene is forecast to rise from 3.1 million tonnes (Mt) in 2022–23, to 3.4Mt in 2023–24, and to 4Mt in 2024–25. In LCE (lithium carbonate equivalent) terms, this equates to 452,000t in 2022–23, 507,000t in 2023– 24, and 596,000t in 2024–25.”
The Resources & Energy Quarterly highlighted the planned expansions of the Greenbushes, Wodgina, Pilgangoora, Mt Marion and Mt Cattlin lithium mines in Australia. This is being supported by the opening of new mines such as Finniss, Mt Holland and Kathleen Valley.
For example, the Pilgangoora mine in WA is looking to boost its lithium production profile from a current capacity of 580,000 tonnes per annum (tpa) of spodumene concentrate to over one million tonnes per annum. This mine is owned and operated by Pilbara Minerals.
While the Resources & Energy Quarterly forecasts spodumene prices to average $US4357/t in 2023, this is set to decline to $US2740/t in 2024 and $US2149/t in 2025. Lithium hydroxide prices are expected to average $US46,746/t in 2023, before dropping to $US35,416/t in 2024 and $US30,357/t in 2025.
It’s important to note that these prices are still historically high. Spodumene concentrate and lithium hydroxide prices averaged $US671/t and $US12,163/t respectively across the three years to 2021.
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