Since the start of September, the price of lithium has risen steadily as the metal’s demand increases and concerns about its supply drive Chinese domestic prices to new highs. Data shows that these prices are the highest the Chinese market has seen since 2018.
During the first half of September, the price of battery-grade and technical lithium carbonate rose by more than 20%. Currently, the prices have surged by 214% and 189% respectively on the Chinese domestic market.
Benchmark Mineral Intelligence has stated that increases in the carbonate price had surpassed lithium hydroxide, adding that the price rally for feedstock and lithium chemicals had been rekindled by strong downstream demand.
Lithium carbonate is commonly used to prevent and treat episodes of mania in individuals suffering from bipolar disorder. Last week, the spot price for lithium carbonate had risen by almost 14% to roughly 165,000 yuan ($25,514) per ton. In the previous week, the commodity was going for 145,000 yuan ($22,421), according to data released by Fastmarkets.
Fastmarkets explained that in China, the price of lithium carbonate had been increasing since July driven by strong demand from the li-ion phosphate battery sector. The consultancy firm noted that speculative stockpiling by traders had become common given the general optimism toward the price of lithium in the short term and increasing futures prices.
Participants in the market agree that prices of lithium in China will continue to increase in the short term, with some expecting the metal to hit 200,000 yuan ($30,926) per ton in this year’s final months after the recent spike observed in the price of spodumene at an auction.
An auction was held on last week by Pilbara Minerals, where bids went higher than $2,200 per dry metric ton. This is roughly a 79% increase over the final price in Pilbara’s miners’ inaugural auction where bids reached $1250 per dry metric ton.
Benchmark Mineral Intelligence projects that the demand for lithium will rise by about 26%, which can be equated to 450,000 tons. This, the company notes, will drive the market into a 10,000-ton deficit. Another consultancy firm Rho Motion also found that the international sales of electric cars had increased by almost 150% in the first seven months of this year, with more than 3 million units being sold across the globe. Of this number, nearly 1.3 million units were sold in China.
With the electric vehicle market projected to grow significantly in the next decade, the only way the price of lithium can go is up. Companies such as First Energy Metals Ltd. (CSE: FE) (OTCQB: FEMFF) that produce metals used in the electric vehicle sector are likely to benefit from this surge in demand for years to come.
NOTE TO INVESTORS: The latest news and updates relating to First Energy Metals Ltd. (CSE: FE) (OTCQB: FEMFF) are available in the company’s newsroom at https://ibn.fm/FEMFF
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