Bank of America sees lithium surplus in 2023 as demand eases

There could beryllium a surplus of lithium successful 2023 arsenic higher proviso volumes are acceptable to supersede slowing request for the metal, said Bank of America Securities' caput of Asia Pacific basal materials, Matty Zhao.

"We spot a batch of proviso coming retired from lithium mines ... We are expecting 38% lithium proviso maturation this year. That's wherefore 2023 is apt to crook into a surplus twelvemonth for lithium," Zhao told CNBC.

She besides said she expects China's electrical conveyance request maturation to dilatory from 95% past twelvemonth to 22% this year. Lithium is simply a cardinal constituent of EV batteries, which Zhao said is becoming an progressively competitory industry.

Since 2021, elevated lithium prices person incentivized adding caller proviso streams, specified arsenic Pilbara Minerals' Ngungaju Plant successful Pilgangoora, Albermarle's Wodgina mine and Tianqi Lithium's Greenbushes mine, according to Zhao.

"Meanwhile, existing capacities similar Sociedad Química y Minera's Salar de Atacama, Mineral Resources' Mt. Marion are expanding aggressively arsenic well," she said.

In the 2 years ending December 2021, lithium carbonate spot prices roseate 5% to basal astatine 277,500 yuan per ton. But subsequently surged to a grounds precocious of astir 600,000 yuan per ton successful November 2022, much than 12 times January 2021 prices.

In May past year, Goldman Sachs forecast lithium proviso to turn connected mean 33% annually betwixt 2022 and 2025.

"We expect Chinese lithium task expansions to multiply rapidly, successful peculiar integrated hard stone projects, conscionable arsenic ex-China spodumene proviso continues to strengthen," the bank's analysts wrote. The steadfast besides said accelerating EV income and stationary retention installations volition besides lend to demand.

While Zhao inactive sees EV request increasing 20% globally, she said it'll beryllium somewhat slower than past year's pace.

"One of the reasons we expect EV maturation to beryllium slower this twelvemonth [is] due to the fact that past twelvemonth was a precise precocious base," she said.

She expects lithium prices successful China to mean astir 400,000 yuan per ton, earlier dropping to betwixt 350,000 yuan to 400,000 yuan successful the adjacent term.

Lithium carbonate prices person precocious been trading astir 382,500 yuan per ton.