Bank of America (BofA) published the report “Global Metals Weekly – Geopolitics supersedes economics in lithium supply”, which analyzes lithium market trends.
The report notes that prices of this resource remain under pressure due to steady increases in supply, and does not expect the current surplus to peak until next year.
The U.S. bank notes that to correct this supply-demand mismatch or “rebalancing problem,” electric vehicle penetration rates need to be 7 to 10 percentage points higher to offset the current surplus in the lithium market.
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For lithium carbonate, the financial institution projects a price of US$ 14,500 per ton in 2024 (currently at US$ 12,500) and for lithium hydroxide a price of US$ 14,000 per ton in 2024 (currently at US$ 12,500).
In the case of spodumene, it expects it to be priced at US$ 1,200 per tonne in 2024 (currently at US$ 1,020).
Other Projections
In an alternative scenario, it could take more than two years for the market to reestablish itself (i.e. rebalance through lower supply).
“However, we are not optimistic that this timeline will be met and see limited upside potential for now,” the BofA report refers.
The bank says it will be difficult for the lithium industry to operate at a loss indefinitely.
“Several weaker and higher-cost operations may come under pressure, and their closure could bring some normalcy back to the market, which is one of the reasons we are still factoring in higher lithium prices,” states the report, reviewed by América Economía on its website.
One of the key conclusions of the bank’s report is that geopolitics is increasingly outweighing economics in lithium supply decisions and new projects.
