Sometimes, market realities can unveil tricky situations. The picture isn’t always rosy and not nearly so in this part of the 21st century where one often struggles to meet a parity between the demand and supply situation.
The above may seem like some random statement. But once you apply this to the context of the global automotive industry, you immediately understand the challenge that the lithium makers are currently facing.
Confirmed reports suggest that where it stands at the moment, then the global demand for lithium, the driving force for Electric vehicles (or EVs) isn’t meeting the supply that there is in the market.
So what does one infer from that?
Truth be told, there’s more supply of lithium than its current demand, owing to a situation in which the renowned lithium makers, such as Albemarle Corp, Tianqi Lithium Corp, and others have been producing lithium in more quantities than what is the original demand for.
And the situation, it appears, is a bit grave at the moment. One can draw sense from this by understanding the fact that currently, the global supply of lithium is exceeding the demand by 5 percent.
Leading national journal in the country on business and economic affairs- The Economic Times- highlighted more insights on the tremendously important story.
It stated, ” A global average of prices is down more than 50 percent since the start of 2018, according to Benchmark Mineral Intelligence, a metals pricing provider that is hosting an EV supply chain conference this week in Los Angeles.”
“Current market conditions are challenging,” shared Luke Kissam, Albemarle’s chief executive officer, as of the last week.
But one wonders whether the same fate would prevail in the future?
It appears that despite the weak data, analysts and executives expect a rosy future when they look out for 10 years.
Benchmark’s Simon Moores called the lithium oversupply an “air pocket that detracts from the building wall of demand,” and noted much of the excess white metal on the market is for so-called technical grade, or the kind that goes into smaller consumer electronics such as stopwatches.
Battery-grade lithium is used primarily in EV batteries, and many automakers have high purity standards. Much of the lithium industry’s capacity to produce high-quality, battery-grade lithium is locked up until 2024, Moores said.
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