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Lithium: Current Global Outlook Through 2021

Powered by a lithium auto battery

Powered by a lithium auto batteryThe lithium industry will see higher-than-expected growth in the next few years, according to the latest Global Lithium Report published by Macquarie Wealth Management in 2016. This, as lithium remains a precious commodity, with prices keeping on rising and no shortage in sight.

Rising prices, but no shortage

After lithium prices surged in 2015, the rise has been unstoppable. The year 2016 posted an overall 8% and 22% increase in lithium and lithium auto battery demand, respectively. This was largely due to producers not raising output in the said year. No shortage has been reported, so far.

More supply is still coming from lithium producing giants like Australia and Argentina. As such, analyst forecasts have remained bullish on lithium prices up until 2018. The report concludes that structurally, lithium still doesn’t have any supply capacity constraint. If the same conditions remain, the forecast will keep on beyond 2018.

Robust demand

Among the most mined commodities, lithium has the most promising demand history in the years surveyed. This is mainly fueled by demand for new-energy vehicle (NEV) batteries, which are seeing a 31% growth through to 2021. This would constitute a third of all lithium demand as compared to only a tenth in 2016.

Currently, electronic vehicles (EVs) comprise of only 20% global sales but takes up over 80% of lithium auto battery demand. This market potential is beginning to get noticed by investors, considering the move for NEV and more energy sustainable cars is swiftly gaining traction. Lithium, although still operating in a small market of large competitors, will definitely gather more interest in the following years.

Lithium, a highly mined commodity, is still being produced by a few countries yet the relevance of the industry is making investors notice. A key source of energy for electronic cars, lithium is indeed a safe buy.

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