Lithium Prices Have Dropped Yet Again! Is it End of Bullish Run

Singapore: After the COVID resurfaced in China, Electric Vehicles production took a tremendous toll as the disruption in the downstream supply chain impacted the vital raw materials market due to a sudden plunge in the overall demand outlook in China. Several Electric Vehicles facilities reduced their output, and numerous sites halted their production due to insufficient supplies of the essential auto parts. Overall development due to the COVID, further coupled with the Chinese authorities' probe over the rising prices of Lithium, challenges the sustainable transition toward a greener economy. As a ripple effect, it resulted in the slowdown in the robust up-stride in the prices of Lithium-battery materials. In the recent week, the offers for Lithium Carbonate again observed a drop of USD 1502 per tonne.

Since the beginning of 2021, Lithium along with few rare earth metals, have been amongst the most heated and discussed commodities throughout the year, and the identical drift in the quotations has also been witnessed during the first quarter of 2022. The producer offers essential Lithium-based raw materials that are utilized in the manufacturing of the EV batteries, such as Lithium Carbonate, Lithium Fluoride, Lithium Hydroxide, etc., witnessed an enormous surge in the quotations as the commodities observed an increment ranging between 400%-700% since the starting of 2021.

ChemAnalyst believes that such rearrangement in the market dynamics was majorly attributed to the rapid transition towards a greener economy, followed by the highly competitive nature of the investors amongst the new players and conglomerates in the energy market. They poured their investments to ensure the supplies for the long-term prospect of demand, but such unprecedently colossal enthusiasm from the investor-led to the supply glut in the batteries raw material market. In addition, it encouraged producers' will to raise the prices offered in the Chinese domestic market.

As per ChemAnalyst, the unprecedented surge in the prices of the vital battery raw materials is likely to drop despite the strong demand outlook from the downstream market for the long run, and the analysis of the Goldman Sachs confirms that with an anticipation of a plunge in USD 15000 per tonne to USD 16000 per tonne against the healthy sentiments and inquiries from the downstream market.