Since this year, the price of lithium has risen sharply at a rate not seen in many years, which has triggered a fierce competition for supply all over the world, and people's anxiety that batteries may face a long-term shortage has also continued to rise.
The lithium price index released by research company and price supplier benchmark mineral intelligence doubled from May to November, and has risen by about 240% this year. The index is at the highest level in five years.
The main reason for the rise in lithium prices is the bet on the continued shortage of the metal. As Tesla and other car manufacturers increase sales of electric vehicles, the demand for lithium is doubling. At the same time, after the recent bear market and supply chain bottlenecks, lithium supply has been limited due to limited investment in new projects. Manufacturers often face environmental objections and cumbersome licensing procedures when trying to extract lithium.
Although there are large reserves of lithium in the world, it is a long and expensive process to convert it into battery grade chemicals. When traders and corporate buyers take advantage of the situation, lithium prices are prone to sharp fluctuations in both directions.
lithium America Corp "It's like being in a hot real estate market. The situation is chaotic," said Jon Evans, chief executive
The startup produces lithium in Nevada and owns a project in Argentina with its Chinese partner ( Ganfeng Lithium Co.Ltd(002460) ). After the recent surge in share prices, the market value of lithium in the Americas has reached about $4 billion.
lithium producers' share prices are rising
The recent sharp rise in lithium prices has raised concerns about whether battery manufacturers and carmakers can obtain enough raw materials to meet the demand for electric vehicles. Many companies are still trying to cope with the challenges posed by the rising prices of other raw materials and key components such as computer chips.
According to research firm Bloomberg Nef, although commodities account for only a small part of the total cost of cars, the surge in lithium prices may lead to an increase in the average price of lithium-ion battery packs, which will be the first rise in at least 10 years. Over the years, it is thanks to the sharp decline in battery costs that electric vehicles are more competitive than traditional fuel vehicles.
The high price of lithium includes Albemarle Corp It is undoubtedly a blessing for a few global lithium giants, including. These companies dominate most of the world's lithium supply.
many people in the industry are also competing to take advantage of this market excitement to buy the shares of lithium manufacturers. The performance of these companies during the year is almost comparable to the soaring of electric vehicle stocks. global x lithium & Battery Tech ETF (Global x lithium & Battery Tech ETF) has risen by more than 40% this year, and the shares of some lithium manufacturers have risen by 70% or more.
The shares of lithium companies are the main channel for investors to bet on the price of lithium, because there is no lithium futures market as active as the oil market.
the shortage of supply is difficult to solve in the short term
Most lithium comes from large mineral countries such as Australia and Chile. There are two ways to produce lithium carbonate: extracting lithium from ore and extracting lithium from salt lake. After extraction, it can be used to manufacture battery grade lithium compounds. At present, opposition to environmental protection and delay in licensing are becoming key obstacles for lithium producers.
Mining giant Rio Tinto PLC promised to develop a lithium project in Serbia for more than $2 billion this summer, but thousands of protesters in this European country recently took to the streets to oppose the government's permission to carry out mining activities that may damage the environment.
"We must strike a balance between the overall global environmental benefits and local impacts," a spokesman for Rio Tinto said in a statement. "We will not favor one over the other."
At the same time, the challenge for lithium producers is that it takes many years and a lot of investment to start the project, which makes it difficult for the supply side to keep up with the rapidly growing demand. "There is enough lithium in the world. The problem is the investment needed to achieve the demand target," Eric Norris, President of the lithium Department of Yabao company, said on the earnings conference call last month.
Although some analysts believe that a large influx of funds into the industry will eventually push up supply and cool the rise in lithium prices. But analysts at Citigroup predict that demand for lithium will still exceed supply this year and next.
some analysts said that the hot lithium market sentiment may still push the price rise until next year . Lukasz Bednarski, chief research analyst of lithium research at IHS Markit, said, "what is more important may be the views of market participants, rather than how short this raw material is." But he expects prices to fall sometime next year.
(Financial Associated Press)
