According to S&P Global Platts’ China Battery Metals Outlook for 2021, most respondents are anticipating Lithium prices to jump by 20% this year due to stronger electric vehicle sales, translating to an increased demand for battery grade lithium carbonate and hydroxide.
For the Outlook, Platts surveyed 23 companies, which included domestic and international lithium metals producers, consumers, and analysts.
Respondents anticipate a surge in demand and prices for Lithium metals
Nearly 96% of respondents said that they are expecting China’s demand for lithium metals to increase this year, with stimulus measures resulting in strong demand for EVs.
Almost 91% of market participants said that they are expecting China’s battery grade lithium carbonate prices to surge this year, while 78% of respondents said that they are anticipating hydroxide prices to be higher this year compared to the previous year.
Interestingly, 56% believed that there will be a big recovery in the battery metals sector this year, while a sizable 35% remained unconvinced the sector has yet to turn the corner.
Most respondents were of the opinion that domestic lithium carbonate prices would reach Yuan 80,000/mt ($12,371/mt) this year, which is a 20% increase compared to early January. However, they thought prices of Yuan 100,000/mt ($15,463/mt) would be unrealistic.
Platts assessments indicated that China’s battery-grade lithium carbonate and hydroxide prices had averaged Yuan 43,845/mt and Yuan 50,346/mt, respectively, in 2020.
Nearly 57% of respondents said that they are expecting spodumene supply to remain tight due to expanding lithium carbonate and hydroxide capacity, translating to higher Chinese lithium metals prices. However, 30% opposed this view.
Chinese capacity expansion and price
Nearly 80% of market participants expect China’s lithium carbonate and hydroxide capacity to expand this year. However, nearly 59% said that this is not expected to put pressure on prices due to the corresponding increase in the lithium metals demand.
EV sales to surge 40%
According to the China Association of Automobile Manufacturers, China’s EV sales are expected to reach 1.8 million units in 2021, which is 40% higher than the year before, boosted by the recovering economy and policies.