Lithium battery raw materials continue to rise, how long will the tight supply of raw materials last?

Due to strong market demand for new energy vehicles and energy storage, the price of lithium battery materials continues to rise. As of the beginning of December, battery-grade lithium carbonate was quoted at RMB 209.99 per ton, an increase of 7.7% from the previous month. Four months ago, the price of lithium carbonate was less than 95,000 yuan/ton.

Year-to-date, the increase in lithium carbonate has exceeded 230%. The domestic average price of phosphoric acid, which is necessary for the production of lithium iron phosphate batteries, was RMB 10,500/ton on December 3, an increase of 109.3% compared with the same period last year. The prices of rare precious metals such as nickel, cobalt, and manganese have also continued to rise.

Since entering December, the third wave of price increases for lithium has started. The price of lithium carbonate will take the lead. It is expected that the price of battery-grade lithium carbonate may reach 250,000 yuan/ton before the Spring Festival.

With tight supply and demand and scarcity of high-quality resources, global competition for lithium resources has become fierce. Companies related to the industry chain have started a journey of “grabbing mines”. Lithium battery manufacturers in the middle of the industry chain have to face the pressure of rising costs.

According to Barrenjoey’s November 2021 forecast, the supply of lithium resources will continue to be tight in the next ten years, and the supply gap will continue to expand. By 2030, the gap between supply and demand will reach 1.2 million tons of LCE. The short supply situation will lead to an overall increase in the price of battery lithium materials.