Lithium Carbonate Prices Exceeded the Projected Margin by 33.34% in Q4 2021

After the 26th Conference of Parties (COP 26) in Geneva took place at the starting of the fourth quarter of 2021. All the party delegates across the globe were negotiated and decided for a fast-track energy transition from fossil fuels to cleaner fuels to uplift the greener economy. Several players and conglomerates, and those already marked their presence in the Energy sector have paced up their investment towards the greener energy sector in anticipation of the better netbacks along with capturing the larger market share in this transition. Recently, EV giant Tesla announced to shift all their production on basis of the Lithium-Iron-Phosphate (LFP) batteries model which further uplifted the sentiments of Lithium producers.

As the world transition towards cleaner energy, manufacturers raced to secure Lithium supplies a key component in the EV batteries. As several analysts estimated that the sales of electric vehicles have soared by 160% throughout 2021, while the Chinese market was anticipated to witness 100% growth to over 5 million in 2022. Despite, the persistently rising demand across the globe, bets on scarcity led manufacturers to prefer long-term contracts as the Lithium miners faced opposition from environmental groups. In November backlash from the environmental protesters forced the Serbian authorities to momentarily suspend the land use plan for the development of the Lithium mine worth USD 2 Billion. Whereas, Chile’s newly elected president Gabriel Boric pledged to form a state-owned Lithium miner along with managing the countries Lithium triangle sustainability.

As per ChemAnalyst, the current scenario of the global Lithium market observing a supply glut against the rising demand. In response, it induced the supply-demand imbalance and the gap between supply & demand widened in Q4. Whereas, various players were seeking the Lithium Carbonate supply on a contractual basis specifically for the battery grade. As a ripple effect, the quotations for the Lithium Carbonate hiked by 33.34% in Q4 compared to the projected prices, and the constant demand for the battery-grade of Lithium is anticipated to change the market dynamics of Lithium Carbonate in the upcoming period.