Written By Lithium is a key element in the production of batteries, and due to its various uses, it often commands a high price. But with prices on the decline since last year, many manufacturers are wondering how low they’ll go. In this blog post, we explore the reality of falling lithium prices and what factors are driving them down. We’ll also look at how manufacturers can adjust their strategies to stay competitive in an ever-changing market. So if you’re curious as to just how low lithium prices can fall, then read on!
What is lithium used for?
Lithium is a key ingredient in batteries, and its price has been falling in recent years. But how low will it go?
In the past decade, the price of lithium has fallen sharply, due to increased production and declining demand. The price of lithium carbonate, the most common form of the metal, fell from a peak of $24,000 per metric ton in 2012 to around $6,000 per metric ton in 2018.
The main use of lithium is in batteries, which are used in everything from laptops to electric vehicles. The fall in prices has been driven by an increase in production, as new mines have come online and existing ones have expanded their output. At the same time, demand for batteries has declined due to slower growth in consumer electronics sales and the rise of renewable energy.
The oversupply of lithium is likely to continue in the short term, putting further downward pressure on prices. In the longer term, demand for batteries is expected to rebound as electric vehicles become more popular and battery technology improves. This could see prices start to rise again later this decade.
The current market state of lithium
The current market state of lithium is uncertain. Prices for the metal have been falling in recent months, and it is unclear how low they will go. The demand for lithium-ion batteries, which use the metal as a key component, has been growing rapidly in recent years. But a number of factors, including a slowdown in the Chinese economy and oversupply of lithium, are now weighing on the market.
Why are prices falling?
Lithium prices have been falling for the past few months, and many experts are predicting that they will continue to fall. There are a number of reasons for this:
- Increasing supply: Massive new lithium mines have come online in Australia and Chile, and more are in the pipeline. This has led to a glut of lithium on the market, driving prices down.
- Falling demand: Electric vehicle sales have slowed down in China (the world’s largest market for EVs) due to a slowing economy and trade tensions with the US. This has reduced demand for lithium, further pushing prices lower.
- Substitution: With prices falling, buyers are increasingly turning to cheaper alternatives such as nickel metal hydride batteries instead of lithium-ion batteries. This is putting further downward pressure on prices.
- Speculation: Many investors who got into the lithium market when prices were sky-high are now selling off their holdings, leading to further price declines.
It’s still unclear how low prices will go, but it’s looking increasingly likely that we could see sub-$10,000/ton levels before long. This would be great news for electric vehicle manufacturers and consumers, but bad news for those mining and producing lithium.
How low will prices go?
The answer to this question largely depends on the factors mentioned in the blog article: production costs, demand from battery manufacturers, and substitution.
If production costs continue to fall and demand from battery manufacturers remains strong, prices could fall further. This is especially true if substitute materials like manganese or nickel become more popular.
On the other hand, if demand from battery manufacturers begins to wane or production costs start to rise, prices could stabilize or even increase. In this case, it would be difficult to predict how low prices might go.
Implications of falling prices
The fall in lithium prices has had a number of implications for the market. Firstly, it has led to a consolidation of the industry with a number of producers shutting down operations or selling up. This has had the effect of reducing supply and supporting prices. Secondly, it has put pressure on the margins of producers, with some having to cut costs or become more efficient to remain profitable. Finally, it has led to increased competition from alternative technologies such as nickel-cobalt batteries.
Conclusion
The fall in lithium prices over the last few years has been dramatic, with some analysts predicting that they could go even lower. While this may be good news for those who are looking to purchase lithium batteries or other products made with lithium, it could spell trouble for suppliers and manufacturers of these products if prices continue to drop. For now, however, we will just have to wait and see how low the price of lithium goes as demand continues to fluctuate.
