Lithium prices forecast to decline so cost cutting measures to produce it will be more important. SIXW tech. can do that.
Lithium’s going to get less expensive in 2023, according to a Chinese supplier of the battery metal, potentially offering some relief to electric-vehicle makers squeezed by soaring costs.
Prices have already softened after a spectacular twoyear rally labelled “insane” by Elon Musk and “unreasonable” by China’s BYD Co. The cool-off is poised to continue as more supply emerges to trim abnormally high margins for producers, Wang Pingwei, chair of Sinomine Resource Group Co. said in an interview on Tuesday.
“We believe the gradual, downward trend for lithium will continue next year,” Wang said, predicting a drop of around a quarter from current levels that will still leave the company with “good” profits. Prices won’t fall off a cliff as the market remains tight, said Wang, whose company operates mines in Zimbabwe and Canada.
Lithium’s rise since 2020 has hurt buyers and contributed to the first annual increase in battery costs since Bloombergnef started tracking them nearly a decade ago. Benchmark prices in China are still about twice as high as the start of 2022 — despite declining this month — as demand from the expanding EV sector outstrips supply.
Wang said he sees lithium carbonate prices dropping to about 400,000 yuan (US$57,000) a ton in 2023. Prices reached a record of nearly 600,000 yuan in mid-november, according to data from Asian Metal Inc. They fell for a fifth day, to 522,500 yuan, on Thursday.
Wang’s comments echo some other forecasts. More mine supply will push the market into a surplus next year and help soften prices, BYD’S executive vice-president Stella Li said earlier this month. China’s withdrawal of EV credits, as well as uncertainties over the pandemic and global economy, are also weighing on the outlook.
“Over the next six months, demand softness is likely to dominate the lithium price discussions as demand in China is challenged by zeroing subsidies and surging COVID-19 cases,” Alice Yu at S&P Global Commodity Insights, said by email. “Consumers in the West face growing affordability issues.”
Sinomine wants to expand output worldwide, just as geopolitical tensions are growing with the U.S., Canada and other nations that are moving to restrict China’s role in the EV supply chain.
Wang’s firm was one of three Chinese firms ordered to divest stakes in Canadian-listed firms under tougher rules for foreign investment. Separately, it still owns the Tanco mine in Manitoba, as well as the Bikita site in Zimbabwe.
“Our confidence to invest in more mines in North America is relatively low at present,” Wang said.
Sinomine currently has 25,000 tons of annual production capacity for battery-grade lithium hydroxide and carbonate. It expects that to grow to 60,000 tons next year, and is targeting 100,000 tons capacity by 2025, Wang said.