Damping in Lithium Metal Prices Eased by Oversupply, But Rebound Expected

The global Lithium Metal market experienced a damping in price trend around the globe as the oversupply eased the pressure from downstream battery and automotive industries. The surge in extraction rate in Australian Lithium mines greatly impacted the reduction of the offer price for Lithium Metal. The production cost was also minimized, majorly in the European and other corners across the globe. The buyers remained in a wait-and-watch situation which led to weakening demand and incited the mills to reduce their prices for Lithium Metal worldwide.

The price of Spodumene, a commercial, economical source of lithium, was suspected to rise this year as the extraction rate of ore was high in the regional mines of Australia. The Australian governments blamed the hike in the global extraction rate of Spodumene to be the major cause for the declining price of Lithium Metal, along with the expansion of local mines such as at Greenbushes, Wodgina, and the establishment of new sites in Finniss, resulted in the mounting of local inventory level for Lithium Metal in the global spot market. Furthermore, the production rate of Lithium Metal has been on a higher edge in the local mines of Chile as the extraction rate was 68% up in the Q3 of 2023. The rapid upsurge in downstream electric vehicle sales since the beginning of this year has increased the demand for Lithium Metal. This has resulted in the rush for new deals to be signed between various mines and major consumer automotive and energy-based companies. Concerning that, the Ganfeng Lithium Group Co. LTD., a major lithium product-related company in China, has been looking forward to investing USD 83 million to uplift Lithium Metal extraction and refining projects in the overseas Australian and Chile region. In addition to that, the Indian government has announced the removal of Lithium Metal from the critical metals list, and this will provide mining permission to private companies, which the local government initially prohibited. After the discovery of Lithium Metal reserves in the Jammu and Kashmir region, the government plans to conduct further surveys to explore more such reserves, which will ultimately add to the boosting supply of Lithium metal.

Meanwhile, the buyer's side remained in a wait-and-watch situation as the excess supply relieved the pressure from the surge in demand from the downstream electrical vehicle and battery sector, leading to global prices plunging. According to major market players, the demand diminished as the local mines were performing at a surging rate, and the former global declining economic condition slowed the sales and consumption rate of electric vehicles. These above-mentioned factors put downward pressure on the local refineries and mills to lower their offer prices to attract customers.

According to ChemAnalyst, the price of Lithium Metal will rebound in the upcoming months as the signing of the major deal will raise the demand for Lithium Metal globally. These include the deal between Albemarle Corporation, a global leader in providing essential elements for mobility and energy to the Australian Mineral Resources Limited, under which Albemarle Corporation will gain complete access to Australia's Kemerton lithium hydroxide processing facility. Furthermore, the deal was signed between the 'Sociedad Quimica y Minera de Chile' (South Africa), a Chilean chemical company, and LG Energy Solutions regarding a long-term deal for providing battery-grade Lithium Metal between 2023-2029. These factors will increase demand and lead to a hike in the price of Lithium Metal in the upcoming term across the globe.