Lithium prices are showing signs of cooling after a period of strong rallies, according to Commonwealth Bank’s head of commodity research, Vivek Dhar. Spodumene spot prices have declined by approximately 2 per cent, while lithium carbonate futures have retreated by 1 per cent. This pullback follows reports indicating that CATL’s Jianxiawo mine may resume operations next month, potentially easing some supply constraints. CATL is a Chinese battery manufacturer and technology company that develops and manufactures lithium-ion batteries for electric vehicles and energy storage systems.
Despite the recent dip, lithium prices remain significantly elevated compared to levels seen in June. Spodumene prices are up 83 per cent and lithium carbonate is up 26 per cent since June. These gains have been largely fuelled by supply concerns in China and robust demand from the battery sector. The potential restart of the Jianxiawo mine could alleviate some of the supply pressures that have contributed to the price increases.
Dhar suggests that while further modest price increases are still possible, a repeat of the price boom experienced in late 2022 is unlikely. This is primarily due to the availability of latent supply that can be brought online to meet growing demand. Additionally, new, lower-cost production sources in China and Argentina are expected to contribute to structurally lower lithium costs in the long term, even as demand for the critical battery material continues to rise.
In summary, while short-term fluctuations are expected, increased supply from existing and new sources should help to moderate lithium prices and prevent a return to the extreme highs seen previously. The market is expected to stabilize as new production capacity comes online and balances out the strong demand for lithium-ion batteries.
