Is the bottom in?, page-1521

ANZ’s Soni Kumari and Daniel Hynes were more bullish in a note today, saying the supply overhang is “not that large, and the fall in prices looks overdone”.They see US$16,000-18,000/t for carbonate by next year.“
A strong supply response to the recent collapse in the price of lithium is setting the stage for a market rebalancing, but a sustained recovery is unlikely until overcapacity in the supply chain for lithium batteries is reversed,” they said.“The persistently weak price is prompting lithium producers to apply fiscal discipline. High-cost miners and processors are likely to exit the market and other producers will either reduce or defer investments.
“Given this, supply adjustments are likely. Lithium mine and refined supplies are concentrated in a small number of countries. Australia and Chile dominate the upstream markets, while China controls 70% of the downstream market.“This makes lithium and battery supplies vulnerable to country-specific risks.
Demand for lithium to support the electrification of the transport sector remains strong.”The latest Fastmarkets price report listed carbonate at US$12,750/t, hydroxide at US$11,850/t and spodumene at US$965/t, the latter down US$10/t on Wednesday.Hynes and Kumari say prices would need to be higher to stimulate more production outside the China supply chain if tariffs on Chinese imports promised by both the Biden and potential Trump administrations come into play after this year’s US Election.“Disruptions in supply from China of lithium’s chemical form would mean lithium or lithium-ion batteries will need to be sourced from somewhere else,” they said.
“This shift will take time and come with additional costs. China’s production of refined lithium sits in the lower quartile of the cost curve, compared to the rest of the world.“To stimulate an increase in production outside China, such as in Chile or Argentina, prices would need to be high.
”ANZ estimates a surplus of less than 25,000t LCE, 1.4% of global demand, though new projects will increase supply in 2025. But they believe with pricing below some miners’ production costs, they are close to bottoming out.