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Moody’s sees weak lithium prices in 2020 due to projects frenzy

  • Monday, December 3, 2018
  • Source:ferro-alloys.com

  • Keywords:Moody, weak lithium price
[Fellow]Moody’s sees weak lithium prices in 2020 due to projects frenzy

[ferro-alloys.com]Spot prices for lithium could be pushed down in the early 2020s despite increasing demand from electric vehicle (EV) batteries makers, a new report from Moody’s Investor Services warns.

The analysts came to this conclusion after carrying out a mine-by-mine analysis projecting lithium supply build-up to 2025 based on company statements, including potential risks.

Effects of spot price weakness resulting from oversupply are expected to be minimal for major lithium producers, such as Albemarle and FMC (Livent), as those companies rely mainly on long-term contracts with minimum prices and other protective terms that mitigate low spot prices and protect margins.

Moody's also predicts a major structural shift in the industry over the next decade. The sector, the report says, will move from a few majors producing battery grade lithium from low cost brine in Chile and Argentina, as well as low cost ore from the Greenbushes rock mine in Australia, to a more diverse industry with new rock-based entrants mining ore in Australia and selling spodumene to Chinese converters, as well as new rock and brine-based suppliers in Brazil, Canada and the US.

The analysts, however, did not consider unexpected difficulties to either expand production or kick-start new lithium projects, such as issues faced recently by Chile’s Soc. Quimica y Minera de Chile (SQM).

In August, SQM Chief Executive Officer Patricio de Solminihac was expecting prices for the second half of the year to be lower than in the first six months.

But last week, the world’s second-largest lithium producer changed its mind. It now expects lithium prices to remain firm in the fourth quarter at about similar levels to earlier this year because of strong demand and supply issues.

The forecast came as the company reported third-quarter revenue and net income that missed analysts’ estimates due to unforeseen hitches in ramping up an expansion project, which hit sales volumes.

Moody’s also warns about the supply of other commodities supply could affect lithium prices: "Nickel and copper availability is likely to constrain the ability to produce electric batteries. This will dampen lithium demand growth until ample nickel and copper is available — which may take a while," the report concludes.

(Mining.com)

  • [Editor:王可]

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