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Lithium prices set to jump to US$60 per kg, says Citi
Price target of US$60k/t for battery-grade carbonate expected to defer or destroy demand
Citigroup substantially upgraded its Lithium forecasts to US$60,000 per tonne for battery-grade carbonate on the back of higher electric vehicle (EV) production and sales expectations.
Battery grade lithium carbonate prices reached an all-time high last year, broke through the US$40,000 barrier, or US$40 per kg, at the start of the year, according to Benchmark Mineral Intelligence, and have kept rising.
The investment bank said extreme lithium pricing was likely to be required to defer or destroy demand, as EV inventories continue to experience a backlog in the face of global supply chain gluts, with the industry experiencing something of an ‘S-curve’.
The suggested price target, Citi says, may squeeze margins for lower range EVs, while possibly restricting non-EV related Lithium demand.
The outlook means further increases for a commodity where prices have already skyrocketed in the last year.
Figures from BMI show the price of lithium carbonate within China rocketed 486% in the 12 months to 1 January 2022.
One of the reasons for the rise is that car manufacturers are increasingly securing their supply of lithium on a contract basis, which restricts supply available for the spot market, resulting in spot prices being so buoyant.