How long can the lithium bull run last?

Lithium, one of the principal ingredients of the lithium-ion battery used for electric vehicles, has been on a bull run since 2015. Production increased substantially in 2017 with a flurry of new investors bringing capacity on stream, meaning there’s no sign of deficit, and further major mine increases are set to come in the next two to five years. Prices still haven’t let up, remaining high after doubling in 2016, although some analysts foresee the possibility of market prices peaking this year. Consultant Roskill puts mine production at 297,300 mt of lithium carbonate equivalent (LCE) — excluding Direct Shipping Ore of 72,900 mt LCE in 2017 — up from 209,000 mt LCE in 2016. This compares with production and consumption of some 150,000 mt LCE in 2015. Despite last year’s increased production, prices rose substantially: battery-grade carbonate contract prices jumped 47% to $11,250/mt CIF Asia, with battery-grade hydroxide up 5% to $12,500/mt, according to the consultancy. Market volatility means sales are made largely on bilateral deals, with prices negotiated quarterly, or using Chinese spot market prices. And further price rises are foreseen: analysts Canaccord Genuity and SP Angel see prices for 2018 in the $14,000/mt range, while UBS has been… continue reading

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