Global lithium prices to become attractive again despite surplus – analyst

Chile's earnings from lithium exports are set to decline this year, like in 2023, as prices fall, but values are expected to become attractive again by 2030.

This year, Chile is expected to produce 275,000t of lithium carbonate equivalent (LCE), up 2%. By May, exports totaled US$1.59 billion, down 65% year-on-year, because of lower prices, according to a report by copper commission Cochilco.

See the report in the Documents box in the top-right corner.

Prices for 99.2% grade lithium carbonate hovered around US$9,800/t during the week, a monthly decline of about 15%.

A downward trend is expected to last until 2027, as several projects worldwide will start operations.

“Production will increase between 2026-27, with a surplus expected in 2028-29, followed by a deficit in 2030, causing prices to rise from US$14,000/t to US$36,000/t and then to average US$25,000/t in subsequent years,” Juan Esteban Fuentes, a market expert at consultancy Benchmark, told an event hosted by mining think-tank Cesco in Santiago.

The supply shortage will result from stepped up manufacturing of electromobility batteries, cathode materials, electrolytes, anodes, solar modules and other downstream products, mainly in China, due to the global energy transition.

On the other hand, lower prices come on the back of weak EV sales, stronger sales of hybrid cars which use smaller batteries with less lithium, and the arrival of new producers, according to Cochilco.

Falling prices have pushed companies to change their production plans after enjoying the boom of 2022 and 2023, when LCE fetched US$70,000-80,000/t.

SURPLUS

This year, global LCE production will reach 1.25Mt, compared to last year's 988,000t. Demand is predicted to reach 1.13Mt. 

Next year, 1.59Mt will be produced and 1.40Mt required. This means the surplus this year will be 117,000t and next year 191,000t, Cochilco said. 

Considering 2015 output of 172,000t and demand of 191,000t, the annual growth rate through 2024 was 25%.

In only nine years, the number of lithium operations increased from 20 in eight countries to 62 in 14, with 80 projects expected by the end of the year. China, Australia and Argentina will contribute around 700,000t/y LCE, according to Fuentes.

The global portfolio involves 150 projects, with 2034 production of 2.6Mt expected to come from 29 countries.

DEMAND

Demand will be driven by EV batteries as internal combustion engines are being phased out.

The IEA predicts that the EV stock will reach 245 million in 2030, meaning one in six vehicles will be electric, and the number will rise to 505mn in 2035, with one in three vehicles being electric.

Amid the growing market, Marcos Lima, former CEO of Chilean state miner Codelco and now partner at Cis Consultores, told BNamericas that companies should analyze their sales plans and “look with interest at the diversification of their client portfolio.”

CHILE-ARGENTINA

In Chile, seven projects are likely to be implemented, including expansions of operations by SQM and Albemarle in the Salar de Atacama. The number could rise once the national lithium strategy is consolidated.

In Argentina, 38 lithium projects are in advanced stages, with potential capacity of 464,420t/y LCE, according to the economy ministry.

Last year, two operations produced 50,659t LCE, while seven are expected to have started production by year-end, the Rosario stock exchange reported in April.

Chile is the world's second largest producer and Argentina is fourth, although the latter is forecast to improve its position before 2030.