Lithium prices are at record highs
5,000 mt LCE deficit expected in 2022
Most of the additional volumes are expected to be available early in the second half of 2022.
The global lithium market has seen prices hit new all-time highs almost daily, buoyed by limited supply and good demand. This strength is expected to continue through 2022 as supply shortages persist and demand for electric vehicles continues to grow.
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Seaborne lithium carbonate prices are up 413% since the beginning of 2021 to $32,600/t cif North Asia on 14 December, while lithium hydroxide prices are up 254% during the same period to $31,900/t cif North Asia, according to S&P Global Platts. data.
Lithium prices were expected to remain strong until 2022, according to several market players, due to the upward dynamics of supply and demand.
According to S&P Global Market Intelligence, the supply of lithium chemicals is forecast to reach 636,000 mt lithium carbonate equivalent in 2022, up from 408,000 mt in 2020 and an estimated 497,000 mt in 2021.
MI forecast this to be met by chemical demand of 641,000 mt LCE in 2022, up from 342,000 mt in 2020 and an estimated 504,000 mt in 2021.
The resulting projected shortfall of 5,000 mt LCE in 2022 compares with a surplus of 66,000 mt in 2020 and an estimated shortfall of 8,000 mt in 2021, with MI saying the current shortfall was expected to allow prices to remain strong in 2022.
Lithium looks brighter
A Tianqi Lithium spokesperson told S&P Global Platts that the market’s understanding of lithium resources was changing.
“Due to its strategic importance, lithium resources will be more difficult to obtain and control. Therefore, lithium resources will become a key factor that restricts the development of the industry in the medium and long term,” said the spokesman.
The spokesman also attributed the price increase to accelerating capacity expansion by some lithium-ion battery makers and rising orders for downstream cathode material.
An Albemarle spokesperson told Platts that the market “will remain tight in 2022 as new industry supply approaches expected demand.”
The company saw more than 30% growth in lithium demand through 2025, largely due to high production and sales of electric vehicles, but also due to larger battery sizes, the Albemarle spokesman added.
According to Platts Analytics, global sales of light-duty plug-in electric vehicles are expected to grow to 6.5 million units in 2022 and 10.5 million units in 2025, up from an estimated 6 million units in 2021 and 3 .1 million units in 2020.
To meet growing demand, several producers plan to expand capacity, although most of the additional volumes are expected to be available early in the second half of 2022, the sources said.
“We hear from suppliers that the first half will continue to be very tight, then it should be a bit better in the second half,” said a consumer source, who believed prices would continue to rise to a maximum of around US$30,000 per ton at the end of the first semester.
“In the second half, the new supply may bring some relief to the market and maybe we will start to see a price correction,” the source added.
All existing providers are planning expansions. Recently, Albemarle’s MARBL joint venture with Minerals Resources in Western Australia announced plans to restart one of the three 250,000 t/y processing lines at the Wodgina mine in the third quarter of 2022.
Livent has resumed its expansion plan and will add 5,000 mt of lithium hydroxide capacity in the US, which is expected to reach commercial production by the third quarter of 2022. It is also adding an initial lithium carbonate capacity of 10,000 tm in Argentina, although this should only reach commercial production. production in the first quarter of 2023, with another 10,000 t to be added in the second phase by the end of 2023.
The 25,000 mt/y Stage 2 expansion of Allkem’s Olaroz brine project in Argentina continues and is expected to be complete during the first half of 2022. Production of the 25,000 mt/y expansion is scheduled for the second half , raising the total capacity of the project to 42,500 mt/year.
SQM aims to reach a total capacity of 180,000 mt/year next year at its Chilean brine operation, with total production expected to reach 140,000 mt in 2022. This represents increases of approximately 60,000 mt/year and 40,000 mt, respectively, as of 2021.
Pilbara Minerals forecasts production capacity of approximately 180,000-200,000 mt/year from its Ngungaju plant at the Pilangoora operation in Western Australia from mid-2022, as it ramps up.
This will complement the existing production capacity of the adjacent Pilgan plant, which is also increasing capacity from around 330,000 mt/y to 360,000-380,000 mt/y through upgrading works.
New projects should also start next year, including Lithium Americas’ 40,000 mt/y carbonate operation in Argentina and Sigma Lithium’s 330,000 mt/y spodumene project in Brazil.