For the Quarter Ending June 2023
North America
The price of Lithium Metal in the US market declined in the second quarter as the largest exporter among South American manufacturers, such as Chile, reduced its price to attract its downstream lithium-ion battery manufacturing industries from local and overseas markets. The reduced activity rate in the downstream Asian market impacted the demand percentage growth. Meanwhile, the overall lithium market is observed to be in a stable state in the US spot market, assisted by the slowdown in new orders and the slippery slope of export sales. The supply chain was operating at optimum levels, and sufficient inventories of the product were reported. However, the supply gap widening and thriving demand for EV batteries means that the declining tendency of Lithium Metal prices may not last long. The surge in the spot market prices of Lithium carbonate in the Asian market resulted in the decline of the offered quotes in the region as the market participants lowered the profit margins amidst rising market competition.
Asia-pacific
The price of Chinese Lithium Metal showed a declining trend in the second quarter, despite the price increase in the initial phase of Q2. In April, the price of Lithium Metal was observed to have an uprising trend as the domestic inventories started drying up. It became very difficult for domestic players to procure raw materials due to the inadequacy of upstream lithium mica and the sluggish pace of the lithium manufacturing rate. If we look around the demand scenario, several facts are playing there, such as shifting consumer preference to Electric vehicles (EVs) from traditional ICE cars, Foreign major player investments, all of which set the demand rocket high, valued at around 964,000 tonnes/year. Further, as per economic experts, a lithium supply deficit will continue for a few more months, at which point the production rate will overtake demand from the buyer’s side. As it will take a decade for the lithium mines to get run, it is estimated by the demand-supply curve that the market will see a price surge of Lithium.
Europe
In the second quarter of 2023, the price of Lithium Metal showed a bearish market trend in the German spot market. The reduction in export quantity also shows a downfall in nature due to declination in the demand curve slope of the Asian battery manufacturing industry. Some other facts playing behind are the lack of competitiveness of the market participants, consumer tendency to purchase goods at a lesser amount both domestically and internationally, etc. The supply outlook in the Belgium market is also bearish because adequate inventories of the product is available in that region. All the port operations and supply chains are running smoothly without any constraints. In May, the market sentiment dropped further in the domestic market of Belgium due to the lowering of price pressure from the major exporter Chile. Also, the demand strength from the downstream lithium-ion battery manufacturing industry and Energy storage system (ESS) market seemed to be weaker.
For the Quarter Ending March 2023
North America
During Q1 of 2023, the Lithium Metal prices in the US market declined as downstream players adopted a wait-and-see approach amidst a lack of inquiries from the Electric Vehicle (EV) sector. Manufacturers had reported that spot lithium prices fell in January, following a global downtrend in lithium prices caused by the more liquid domestic Chinese market. The supply outlook in the domestic market had remained sluggish in January due to decreased market participation among downstream players and the impact of extreme weather on regional production rates and transportation logistics. In February, some sellers of lithium stocks had preferred to destock and lower their offer prices rather than risk bigger losses if the global decline continued. The EV industry's poor performance had resulted in low demand for battery raw materials, which had further pressured prices downward. In March, Lithium Metal prices in the US market had dropped due to low buying interest among end-users and ample supply, leading to oversupply and continued downward pressure on prices. As a result, the Lithium Metal prices for FOB Boston (USA) had settled at USD 369802/MT.
Asia Pacific
During the first quarter of 2023, the Lithium Metal market experienced a bearish sentiment with reduced buying appetite and a persistent lack of demand. Market participants observed a sluggish market with few trades due to low demand. In an attempt to boost sales in a stagnant market, some eager traders lowered their offers in January, but the low demand continued. Producers suspended production due to thin order books, which kept demand for lithium salts low. Top-tier manufacturers primarily focused on export orders while fulfilling only a few domestic orders. Lithium prices decreased both domestically and internationally due to weak domestic demand and changes in supply and demand patterns in other countries. In March, downstream plants remained active, focused on destocking, and some still maintained low operating rates. Despite mainstream manufacturers reducing their offers, market transactions remained poor. Buyers reported sluggish demand and were unwilling to pay high prices for lithium, leading to a drop in upstream lithium hydroxide prices. Lower prices in China put pressure on lithium prices globally, despite strong overseas demand. As a ripple effect, Lithium Metal prices for FOB Shanghai (China) settled at USD 381375/MT.
Europe
Throughout the first quarter of 2023, the European Lithium Metal market exhibited a mixed sentiment due to sturdy downstream inquiries from the EV market. However, participants noted that demand remained sluggish in January, and industrial buyers opposed higher price levels. Despite a predicted increase in supply, lithium projects had faced difficulties in meeting their supply targets, leading to a lack of activity in the spot market. Some European distributors had taken advantage of the softening Chinese market, but the domestic market's pessimism had contributed to a downward trend in spot prices in mid-Q1. Although some lithium stocks had been purchased in March at higher prices, sellers wanted to reduce their offer prices and destock them rather than risk further losses. Additionally, the European companies had struggled to acquire Lithium resources in Chile and Argentina due to mismatched supply and demand profiles, with producers expected to explore integrated conversion facilities and include processing capabilities to address the supply-demand gap. As a ripple effect, the Lithium Metal granulate prices for FOB Hamburg (Germany) settled at USD 87342/MT.
Overall the Lithium Metal prices in the North American region observed a slight to negligible shift during the last quarter. The impact of slowdown of Lithium salts in the far east Asian region has levied a considerable impact, as the rapid growth in the offered quoted has been limited. However, the cost support from the feedstock has remained persistent on an upward trajectory. Whereas, the Lithium ingot supply has improved after the import volumes drastically improved as the Asian Lithium ingot suppliers were keen to destock the running inventories ahead of the upcoming holidays. In addition, during the quarter's end, the market dynamics have disrupted considerably as the downstream manufacturers took precautionary measures by reducing or temporarily suspending the operating rates at the enterprises ahead of the extreme weather conditions coupled with the transportation disruptions.
In the fourth quarter of 2022, the Lithium metal market in the Asia Pacific region observed a considerable relaxation in availability as the considerable supply of the feedstock was diverted to make Lithium metal instead of Lithium salts for EV batteries. As per the market experts, the drop in the sales of EVs in China and the conservative attitude of the far east Asian markets to restrict the cash outflow in order to improve the enterprise's financial performance in annual reports has curtailed the demand for Lithium Salts. As a ripple effect, the Lithium metal growth has been limited, even though the cost support from the feedstock spodumene has remained at a higher level.
The Lithium metal in the European market has remained stagnant, with a considerable shift in the market dynamics during the fourth quarter of 2022. The cost of living in the region has soared to historic highs on the backdrop of rising inflation and interest rates. In addition, the supply and demand outlook both were pressurized amidst the high energy rates in the European markets. The smelters have dropped production to sustain netbacks. At the same time, a similar trend was also witnessed in the downstream industries. However, the demand deficit was covered by the import of Lithium metal from the overseas market.
