Lithium Demand to Grow at Average Annual Rate of 30% in 2021-23, Bacanora Says — Commodity Comment

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By Jaime Llinares Taboada

Bacanora Lithium PLC on Thursday said that lithium demand is expected to increase at a compound annual growth rate of 30% through 2023 from 2020 levels. This is what the owner of the Sonora lithium project in Mexico had to say at its interim results:

On lithium prices:

“Despite the unprecedented global disruption precipitated by the COVID-19 pandemic, 2020 and H1 2021 saw a revival in market sentiment for lithium with allied rebound in demand and prices.”

“In 2020, lithium prices were beset by a softening in demand caused by COVID-19 related softening demand caused by lockdowns which restricted manufacturing output and related reduction in consumer confidence.”

“By the turn of the year prices had begun to recover, with reported prices in December 2020 for 99.5% lithium carbonate battery-grade spot midpoint prices CIF China, Japan & Korea at US$6,750 and min 56.5% lithium hydroxide battery-grade spot midpoint prices CIF China, Japan & Korea at US$9,000 per tonne respectively.”

“Across H1 2021, lithium product prices continued their upward trajectory, by June 2021 prices continued to be strong with lithium carbonate and lithium hydroxide both at US$13,500 and US$15,000 per tonne respectively.”

On lithium demand:

“This buoyancy of the lithium price follows on from the market tightening as the electric vehicle (“EV”) revolution accelerates, demand has eroded the oversupply seen in 2019 and 2020.”

“This tightness in the market is expected to continue, with Credit Suisse saying that lithium demand might treble by 2025 from 2020 levels and that supply would be stretched to meet that demand, but higher prices were needed to incentivise the required supply response.”

“World demand for lithium is forecast to increase from 305,000 tonnes lithium carbonate equivalent (“LCE”) in 2020 to 452,000 tonnes in 2021 (48% increase YOY).”

“However global EV sales are expected to exceed 4.6 million in 2021 vs 3.2 million unit! s in 2020, which would be a 44% increase for the year, which is comparable to the 43% increase from 2019 to 2020.”

“The consequence of this dramatic change in consumer behaviour is that in 2023, demand for lithium is forecast to increase at a CAGR of 30% to 675,000 tonnes LCE from 2020 levels.”

“By 2030, global battery demand is expected to increase 14-fold by 2030 with Statista estimating lithium demand of 1.8 million tonnes by 2030.”

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

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