Global Lithium Metal Prices Decline Amidst Supply Surge and Lower Downstream Consumption

In the first half of December, the price of Lithium Metal plunged across the globe as the supply from the major mining countries increased, leading to a hike in inventory levels in the international market. The joint ventures and contracts signed between the major manufacturing industries have increased the supply of Lithium Metal in the downstream market. Moreover, the consumption rate from the downstream battery industries remains dampened as the surplus supply and lower demand from the downstream battery industry, kept the global market players in a wait-and-watch situation.

The recent deals signed by the Global Lithium Metal manufacturing giants have been a major cause in the upliftment of Lithium Metal extraction across the globe. Sociedad Química y Minera de (SQM) Chile, a major manufacturer of Lithium Metal in Chile, has now teamed up with Gina Rinehart’s Hancock, Executive Chairman of Hancock Prospecting, a privately owned mineral exploration and extraction company in Australia, to fix a USD 1.14 billion bidding deal with Australian Azure Minerals company. This agreement would provide SQM, the second-largest producer of Lithium Metal globally, an entry point into the Australian market through an investment in Azure's Andover project and a collaborative venture with Hancock. Hancock brings valuable assets such as rail infrastructure and expertise in local mine development to the partnership. Additionally, the SQM, Chile has also signed a joint venture with Novo Resources to expand the resource exploration in Australia. Meanwhile, the Australian Lithium Metal producer Allkem, has recently accepted the USD 10.6 billion merger offer from the US giant Livent, leading to the creation of the world’s biggest Lithium Metal Company in the World.

Meanwhile, there has been a decline in demand from downstream battery industries, attributed to a sense of caution among Lithium Metal buyers regarding the future outlook of this key battery metal in the coming year. This cautious approach persists despite a significant drop in prices. Producers have recently engaged in discussions with clients, primarily in Asia, to finalize contracts for the year 2024. Additionally, the development of the Lithium Metal sector in the US and Canada is expected to progress in 2024, with the potential initiation of new construction projects aimed at bolstering domestic supply. This positive outlook comes despite challenges related to pricing and demand that have affected the global industry in the current year. The consumption rate has been on the lower side, with overseas entities reducing their orders due to difficulties in utilizing the quantities procured under long-term contracts.

According to ChemAnalyst, the price of Lithium Metal is anticipated to remain on a declining trend, at least until the end of 2023. The upcoming year is anticipated to uplift the Lithium Metal market as the Chinese automotive and battery industry, is planning to expand the consumption rate in the first half of 2024. The Chinese manufacturers are planning to launch the 007 Sedan model which is said to work on battery, with a single recharge of 15 minutes, could cover a distance of 500 KM, together with an 800-voltage electric system. Along with this, other advancements in renewable energy, battery, and electric vehicle technology will surely uplift the market in the latter half of the coming year.