Soaring Benchmark of Lithium Batteries Concerns a Sustainable Transition for Greener Economy

Overall, the market dynamics of Lithium observed a major shift after its demand grew at an unprecedented rate in Lithium-ion batteries. The market transited at a rapid pace as the consistent dependence on fossil fuels laid a significant rise in the global carbon levels, and created a necessity to take preventive measures to curb emissions. After COP 26 Glasgow, numerous governments besides their diplomats, all agree to push the transition toward a greener economy after tough negotiations. The initial decision is to replace ICVs with EVs and such developments gyrated the Lithium market upwards tremendously.

The benchmark of Lithium already crossed the 500% mark on the graph on a year-on-year basis, as the Ex-Shenzhen prices crossed the USD 70000 per tonne mark in March 2022. Whereas, alone in 2022 the insane commodity rally has driven the prices by a nearly double margin. The market sentiments were already running hyped due to the transition to a green commodity supercycle, which was further supported by the supply-demand imbalance and geopolitical turmoil in the eastern European region. In February, the transition cycle staggered as the Chinese market closed on the occasion of the Lunar New year which kept the market movement subdued and suppliers were only responding to the long-term contractual orders, by the time market reopened the Lithium market gained tremendously. Such rapid development on the price front and the eagerness of EV players raised questions about the promised sustainable development towards the greener energy transition.

As the global benchmark for Lithium commodity were majorly dependent on the market movement of China. The Chinese authorities acknowledged the pricing hindrance to the fundamentals for a sustainable transition towards a greener economy. In response, the prices for the raw materials for the Lithium Battery are currently under strict supervision, as the deputy secretary-general of the China Association of Automobile Manufacturers pointed out the irrationality of the current hike for the raw materials besides maintaining the supply-demand balance.

As per ChemAnalyst, the dynamics of the Lithium market are soaring rapidly across the globe. Numerous players and conglomerates were consistently eager to procure adequate supply has strengthened the market competitiveness. There were numerous uncertainties but with the move made by the Chinese authorities, it is anticipated that the prices for Lithium are likely to witness significant ease.