Lithium costs remained low in 2024 on the again of oversupply and weak demand.
Lithium carbonate spent nearly all of the 12 months contracting, shedding 22 % between January and December. Costs began the 12 month interval at US$13,160.20 per metric ton (MT) and ended it at US$10,254.16.
The weak worth atmosphere was the results of a provide glut, an element that S&P International expects to persist in 2025.
In a November report, the agency forecasts a “world surplus of roughly 33,000 metric tons of lithium carbonate equal in 2025, a lower from the 84,000 metric tons surplus projected for 2024 and 2023’s 120,000 metric tons.”
Towards that backdrop, S&P is projecting continued lithium carbonate worth declines subsequent 12 months, with the annual common worth projected at US$10,542 in 2025, down from US$12,374 in 2024 and a steep drop from US$40,579 in 2023.
Including to cost stress, advances in various battery applied sciences are posing challenges to lithium’s conventional dominance. In 2024, these elements mixed to create a 12 months of volatility and transformation for the important battery steel.
Provide surplus weighs on lithium costs
Market saturation emerged as a key theme for lithium early within the 12 months as a continued surplus weighed on costs.
The surplus comes on the again of steadily rising mine provide during the last 4 years. In 2020, the annual global mine supply tally was 82,500 MT, a quantity that more than doubled in 2023 to 180,000 MT.
Costs for lithium carbonate remained within the US$13,000 vary for January, however started to rise in mid-February, finally reaching a year-to-date excessive of US$15,969.26 on March 14.
The worth momentum was attributed to bulletins that some new tasks had been being delayed, whereas operations in growth and manufacturing had been being transitioned to care and upkeep.
“We additionally started to see some provide response to the persistent cheaper price atmosphere, with the announcement of delays to growth plans and layoffs at some lithium producers or aspirants,” Adam Megginson, analyst at Benchmark Mineral Intelligence, instructed the Investing Information Community in the course of the first quarter.
“I solely count on this to palpably impression the availability image in 12 to 18 months, as that’s when these expansions had been deliberate to ramp.”
Document-setting lithium M&A exercise
This precarious panorama was fertile floor for M&A offers, which occurred all year long.
“As lithium tasks wrestle to remain above water, analysts additionally count on M&A exercise to extend as main producers with constructive money circulate attempt to discover offers available in the market whereas junior firms attempt to promote tasks in a market the place personal capitals are scarcer than earlier years,” a February 12 report from S&P Global states.
2024 began with the completion of Livent (NYSE:LTHM) and Allkem’s merger of equals. The deal noticed the 2 firms mix below the Arcadium Lithium (NYSE:ALTM,ASX:LTM) banner,boasting a market cap of US$5.5 billion and an in depth portfolio of lithium manufacturing belongings and sources throughout the Americas and Australia.
By September, the weak worth atmosphere had compelled Arcadium to halt expansion plans for its Mount Cattlin spodumene operation in Western Australia, with plans to transition to care and maintenance by mid-2025.
Regardless of that setback, Arcadium made headlines as soon as once more a month later as world mining main Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) made a move to acquire the multinational lithium firm. As soon as the US$6.7 billion all-cash transaction closes, Rio Tinto will turn out to be the third largest producer of lithium globally.
One other notable 2024 lithium deal was Pilbara Minerals’ (ASX:PLS,OTC Pink:PILBF) August plan to acquire Latin Resources (ASX:LRS,OTC Pink:LRSRF) in an all-stock deal valued at roughly US$369.4 million.
The acquisition will grant Pilbara Minerals entry to Latin Assets’ flagship Salinas lithium venture in Brazil’s Minas Gerais state, enhancing its presence within the burgeoning North American and European battery markets.
In late November, Sayona Mining (ASX:SYA,OTCQB:SYAXF) and US-based Piedmont Lithium (ASX:PLL,NASDAQ:PLL) unveiled a merger that’s set to create a consolidated entity valued at about US$623 million.
These offers helped make lithium one of the lively M&A segments within the important minerals house.
“Lithium stands out with each the best quantity of offers and largest whole deal worth from 2020-24 (US$24 billion),” a 2025 critical minerals outlook from Allens reads. “Deal quantity for lithium M&A offers peaked in 2023, however stays comparatively excessive in 2024, displaying comparable quantity to 2022.”
International EV gross sales rebound amid commerce tensions and coverage shifts
As one of many largest end-use segments for lithium, the EV trade is a key issue available in the market.
Weak North American EV gross sales early within the 12 months offset some positivity out of Asian markets; nonetheless, in late Q3 and This fall, world gross sales started to select up momentum. In October, the Chinese language EV market set one other month-to-month report with 1.2 million items bought, a 6 % month-on-month enhance. In keeping with information from analysis agency Rho Movement, EV gross sales between January and October had been up 24 % in comparison with the identical interval in 2023.
“The worldwide EV market is now choosing again up once more, hitting report gross sales for the second month in a row. A lot of the progress is coming from China and Western producers are clearly feeling threatened by this. The US market stays buoyant partially because of Inflation Discount Act (IRA) funding for customers switching to electrical which can be in danger with the beginning of the Trump presidency,” said Charles Lester, information supervisor at Rho Movement.
Nonetheless, there may be hypothesis that President-elect Donald Trump will dismantle key components of the IRA, significantly focusing on the US$7,500 EV tax credit score. His transition crew has indicated intentions to get rid of this client incentive, which was designed to advertise EV adoption and bolster the nation’s clear power sector.
Critics have argued that eradicating the tax credit score might hinder home EV gross sales and potentially benefit foreign competitors, notably China, by undermining investments within the US battery provide chain.
With that in thoughts, the proposed repealing of the tax credit score has raised issues amongst automakers and environmental advocates about the way forward for America’s competitiveness within the quickly rising world EV market.
The Biden administration made efforts to handle that situation in Could, when it sharply increased tariffs on Chinese language EVs, elevating duties to over 100% to counter alleged unfair commerce practices. Whereas the transfer was made to bolster home EV manufacturing and gross sales, critics stated it might disrupt provide chains and lift client prices.
Following go well with in August, North American neighbor Canada levied a 100 percent tariff on Chinese language EVs, aligning with the US and EU to counter China’s commerce practices. On the time, Prime Minister Justin Trudeau criticized China’s insurance policies as unfair, citing their impression on Canadian industries and employees. He emphasised the necessity to shield the home EV and steel sectors from overcapacity brought on by China’s state-driven manufacturing.
Canada additionally launched a 25 % surtax on Chinese language metal and aluminum imports.
In response, China filed a formal complaint with the World Commerce Group over Canada’s resolution to impose tariffs on Chinese language-made EVs, metal and aluminum. Beijing criticized the measures as protectionist and in violation of worldwide commerce guidelines. China additionally filed comparable complaints towards the US and EU.
As uncertainty continues to plague the lithium house, analysts are projecting a sustained low-price atmosphere into 2025, regardless of the manufacturing cuts and venture delays that had been prevalent in 2024.
“With the manufacturing cuts introduced thus far having primarily been about slowing future progress somewhat than rapid manufacturing, robust mine provide progress continues to be anticipated within the short-term, particularly 24.7 % in 2024 and 17.4 % in 2025,” Macquarie analysts told S&P Global as 2024 drew to an in depth.
“This means decrease costs might want to persist for longer within the absence of any additional price-induced cuts that rebalance the market ahead of our forecasts point out.”
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Securities Disclosure: I, Georgia Williams, maintain no direct funding curiosity in any firm talked about on this article.
Editorial Disclosure: The Investing Information Community doesn’t assure the accuracy or thoroughness of the knowledge reported within the interviews it conducts. The opinions expressed in these interviews don’t replicate the opinions of the Investing Information Community and don’t represent funding recommendation. All readers are inspired to carry out their very own due diligence.
