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Expected Lithium Supply in 2030 to Reach 3.33 mil ton:

Lithium oversupply possibly leading to downward stabilization of lithium carbonate price

-       In 2028, the price of lithium carbonate may plummet to 130k yuan per ton 

The price of lithium, which has recently seen a big drop, is expected to experience downward stabilization in the long term. It seems to tick up after years of gradual declines till 2028.

According to published by SNE Research, lithium carbonate is forecasted to see a continuous drop in price due to oversupply of lithium. In early 2022, the price of lithium carbonate soared to 580k yuan (approximately 110 million won) per ton because of a shortage in supply of lithium raw materials. However, since the end of 2022, the price had plummeted to 160k yuan (approx. 30 million won) within just 5 months. This sudden drop was interpreted as being affected by the termination of government subsidy for electric vehicles offered by the Chinese government and also by the increases in battery inventory kept by battery makers.

The price of lithium carbonate is forecasted to remain at a downward but stabilized trend till 2028. A major reason for such downward momentum is possible increases in supply as those new lithium mine projects are expected to start operation in full swing. The consequent oversupply may cause an imbalance between supply and demand. After breaking a record for the gap between supply and demand in 2027, it is expected to lead to a drop in the lithium price in 2028 down to 130k yuan (approx. 28 million won) per ton.

A decline in the price of lithium may act as a burden for mining and refining/smelting companies. Under these circumstances, those global mining companies who have relatively higher margins than others are expected to survive from the competition.

On the other hand, the production of lithium by global mining companies are expected to increase from 0.95 million ton in 2023 to 3.33 million ton in 2030, at a growth rate of nearly 19.6%. Likewise, demand for lithium is forecasted to increase from 0.79 million ton per year in 2023 to 2.53 million ton per year in 2030, posting a high CAGR of 18.1%. However, as the rate of demand growth seems to be relatively lower than that of lithium supply, approx. 0.79 million ton of oversupply is expected in 2030.

Along with the exiting lithium mining countries such as South America and Australia, minor players are expected to join the game, including North America, Europe, and Africa. The advent of new mining countries may bring about a positive impact on the lithium industry; for instance, diversification of supply chain and securement of price stability.

The Inflation Reduction Act announced by the US stipulates that at least 40% of the critical minerals in the battery should come from the United States or a Free Trade Agreement (FTA) partner. This opens up an opportunity for other countries to join the lithium mining business in order to respond to the IRA. All of these are expected to lead to increasing opportunities for battery makers to be supplied with lithium which abides by the IRA regulations.