Lithium demand from EV industry stronger than estimated: Albemarle

“We are probably underestimating the [lithium] demand from EV [electric vehicle] industry,” Kevin Chen, vice president commercial, APAC at major lithium producer Albemarle said on Fastmarkets’ Asian Battery Material Conference 2023

Albemarle has adjusted its projection of lithium demand to 3.7 million tonnes LCE in 2030, 15% higher from its previous forecast on stronger electric vehicle (EV) demand. This, coupled with the time span of more than 10 years for developing lithium mining projects, would leave an undersupply of 500,000 tonnes LCE by the same year.

“We have been trying to capture the forecast for lithium, but we have to correct the lithium forecast upward every year based on the new information and announcements from the industry,” Chen said.

Total committed investment announced by OEMs into electrification surged from $90 billion in 2018 to $1200 billion in 2022, Albemarle estimated. This would bring the forecasted EV penetration to as much as 50% globally by 2030, with more than 48 million vehicles powered by battery.

Fastmarkets made a similarly strong projection of 14% growth for lithium-ion battery demand over 2021-2033, Fastmarkets’ Battery Raw Materials Analyst Phoebe O’Hara said in the conference.

Despite the unanimous bullishness for the longer term globally, sentiment in the Chinese market, which has been driving the growth in world’s EV and battery market, was to the contrary.

Wei Xiong, lithium advisor of Traxys, expects Chinese demand for lithium to reach 1,391,000 tonnes LCE by 2025, short of the forecasted supply of 1,733,000 tonnes in the same year.

Chinese market participants cautious about recent lithium price uptick

Many Chinese market participants are cautious about the recent uptick in China’s domestic lithium chemical prices, considering the high stocks held by the entire value chain.

Fastmarkets’ assessment of spot lithium carbonate 99.5% Li2CO3 min, battery grade, ex-work domestic China ticked up for the first time since 17 November 2022 to hit 170,000-195,000 yuan per tonne on April 27, 2023.

A major Chinese battery producer is holding 80,000 tonnes of lithium chemical stocks and a lithium producer has more than 100,000 tonnes of lithium salts sitting at two Asian ports, waiting for buyers, according to market sources.

The end of the [Chinese government subsidy] created some uncertainty to the growth in EV penetration rate globally.

“Global lithium carbonate supply is likely to double from 2022 by 2025. But what’s the likelihood for EV penetration to double during the same period?” asked an analyst at an international research institute. They are suspicious whether EV demand will be accompanied by proportionate growth.

China’s EV production rose by 44.8% from a year earlier to 674,000 units in March, the China Association of Automobile Manufacturers (CAAM) said. This was also up from 552,000 units in February.

China’s EV sales rose by 34.8% year on year to 653,000 units in March, which was also up from 525,000 units in February, CAAM data showed.

The whole auto sector entered a period of promotion in Q1 2023 to stimulate consumption, but demand from end consumers has not picked up significantly, CAAM noted. The overall market has remained under pressure.

Keep up to date with global market insights, lithium data and predictions for 2023 and beyond.

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