Lithium market to enter deficit until 2035: Canaccord

The global lithium market is set to enter a near-decade-long deficit as a lack of mine investment weighs on supply of the electric vehicle battery metal, according to investment bank Canaccord Genuity.

In a note published Wednesday, Canaccord analysts said they expect to see a “material market deficit” starting this year, given that a tightening supply has more than offset the weakness in near-term demand.

This deficit, they added, could last until 2035. Even if rising lithium prices through 2027-28 could ignite a supply response, that would still fall short of their demand growth forecasts, the analysts said.

Prices surge

In recent months, lithium prices have shot up on persistent worries over supply, led by the suspension of a key mine in China, one of the world’s leading suppliers. Earlier this year, Zimbabwe, another top producer, introduced a ban on raw lithium exports, exacerbating the market conditions.

Prices compiled by The Wall St. Journal show 99.5% lithium carbonate from China at $25,000 per tonne on Thursday compared with $9,550 per tonne a year ago. China’s 56.5% lithium hydroxide hit $22,600 per tonne from $9,375 per tonne this time last year. 

Canaccord’s outlook assumes no further disruptions in China and elsewhere, which could well extend the deficit beyond the projected period.

According to the analysts, the lithium market would require “significant” investment in new supply in the long term, even if there are no more supply risks and drastic changes to demand forecasts.