Lithium is one of the most in-demand metals at the moment due to its application in electric vehicle batteries. With electric cars projected to replace internal combustion engine cars over the next few decades, lithium has earned the moniker “white gold” amid projections of significant demand.
However, lithium prices tumbled toward the end of 2022, falling by close to 20% amid a general drop in prices among minerals, including copper and cobalt. Lower lithium prices resulted in a drop in production prices and allowed EV makers such as Tesla to drop the prices of their EV offerings.
Experts believe that this drop in lithium prices was due to less bullish sentiment concerning Chinese-made electric vehicles as a decade-long EV subsidy program finally came to an end. The resulting drop in EV sales in China, which is the largest EV market on the globe, also brought lower lithium prices. At its lowest point, lithium spot prices were down by up to 70%.
But even though lithium didn’t see an increase in prices from 2022 to early 2023, lithium may rebound in the coming months.
Lithium may have slumped for a few months, but the market factors that pushed lithium prices up are still at play. Several countries are still keen on electrifying their road transportation systems and have invested billions of dollars into developing electric cars and building EV infrastructure.
Most traditional automakers have also pledged to invest in electric vehicles and aside from Tesla, several car makers are working on or have already released electric vehicle models. With the metal expected to enjoy significant demand in the near future, lithium prices are already starting to recover from the 2022 slump. MetalMiner revealed via its reporting services that lithium spot prices in China are up by more than 10% from April. The recovery of China’s mammoth electric vehicle industry is also responsible for lithium’s improved performance.
With commodities change operator CME’s lithium contract gaining traction despite a relatively slow start, experts predict that it will soon build up enough liquidity to provide investors with a reliable hedging opportunity. According to a statement from American lithium producer Livent, the company expects to see a “continued increase in average realized prices” over the course of 2023.
The company revealed that it expected a 40% increase in average prices amid a market that would likely see lithium buyers across the world spend more on lithium purchases.
Lithium isn’t the only metal that is set to benefit from the drive to electrify transport. Other metals, such as silver and their miners such as Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) are also poised to register increasing demand over the coming years and decades as more forms of green energy are adopted around the world.
NOTE TO INVESTORS: The latest news and updates relating to Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) are available in the company’s newsroom at http://ibn.fm/ELRRF
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