Lithium costs remained low in 2024 on the again of oversupply and weak demand.
Lithium carbonate spent the vast majority of the 12 months contracting, shedding 22 p.c 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 surroundings 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 vital 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 world mine provide tally was 82,500 MT, a quantity that greater 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 surroundings, with the announcement of delays to enlargement plans and layoffs at some lithium producers or aspirants,” Adam Megginson, analyst at Benchmark Mineral Intelligence, informed the Investing Information Community through the first quarter.
“I solely anticipate this to palpably influence the availability image in 12 to 18 months, as that’s when these expansions had been deliberate to ramp.”
Report-setting lithium M&A exercise
This precarious panorama was fertile floor for M&A offers, which occurred all year long.
“As lithium tasks battle to remain above water, analysts additionally anticipate M&A exercise to extend as main producers with optimistic money move attempt to discover offers out there whereas junior corporations attempt to promote tasks in a market the place non-public capitals are scarcer than earlier years,” a February 12 report from S&P International states.
2024 began with the completion of Livent (NYSE:LTHM) and Allkem’s merger of equals. The deal noticed the 2 corporations mix below the Arcadium Lithium (NYSE:ALTM,ASX:LTM) banner,boasting a market cap of US$5.5 billion and an intensive portfolio of lithium manufacturing belongings and sources throughout the Americas and Australia.
By September, the weak worth surroundings had compelled Arcadium to halt enlargement plans for its Mount Cattlin spodumene operation in Western Australia, with plans to transition to care and upkeep 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 transfer to accumulate the multinational lithium firm. As soon as the US$6.7 billion all-cash transaction closes, Rio Tinto will grow 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 accumulate Latin Assets (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 undertaking 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 vital lively M&A segments within the vital minerals area.
“Lithium stands out with each the very best quantity of offers and largest complete deal worth from 2020-24 (US$24 billion),” a 2025 vital minerals outlook from Allens reads. “Deal quantity for lithium M&A offers peaked in 2023, however stays comparatively excessive in 2024, exhibiting 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 out there.
Weak North American EV gross sales early within the 12 months offset some positivity out of Asian markets; nonetheless, in late Q3 and This autumn, world gross sales started to choose up momentum. In October, the Chinese language EV market set one other month-to-month document with 1.2 million models offered, a 6 p.c month-on-month improve. In accordance with information from analysis agency Rho Movement, EV gross sales between January and October had been up 24 p.c in comparison with the identical interval in 2023.
“The worldwide EV market is now choosing again up once more, hitting document gross sales for the second month in a row. Many of the development 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,” stated Charles Lester, information supervisor at Rho Movement.
Nevertheless, there’s hypothesis that President-elect Donald Trump will dismantle key elements of the IRA, notably focusing on the US$7,500 EV tax credit score. His transition staff 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 may hinder home EV gross sales and doubtlessly profit overseas rivals, 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 considerations 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 deal with that problem in Might, when it sharply elevated tariffs on Chinese language EVs, elevating duties to over one hundred pc to counter alleged unfair commerce practices. Whereas the transfer was made to bolster home EV manufacturing and gross sales, critics stated it may disrupt provide chains and lift client prices.
Following swimsuit in August, North American neighbor Canada levied a one hundred pc 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 influence on Canadian industries and staff. He emphasised the necessity to defend the home EV and steel sectors from overcapacity attributable to China’s state-driven manufacturing.
Canada additionally launched a 25 p.c surtax on Chinese language metal and aluminum imports.
In response, China filed a proper criticism 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 related complaints in opposition to the US and EU.
As uncertainty continues to plague the lithium area, analysts are projecting a sustained low-price surroundings into 2025, regardless of the manufacturing cuts and undertaking delays that had been prevalent in 2024.
“With the manufacturing cuts introduced up to now having primarily been about slowing future development fairly than fast manufacturing, sturdy mine provide development remains to be anticipated within the short-term, particularly 24.7 p.c in 2024 and 17.4 p.c in 2025,” Macquarie analysts informed S&P International as 2024 drew to an in depth.
“This implies decrease costs might want to persist for longer within the absence of any additional price-induced cuts that rebalance the market prior to 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 data reported within the interviews it conducts. The opinions expressed in these interviews don’t mirror 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.
