"Lithium prices will not be banging on historical highs tomorrow, but we are already seeing nickel and cobalt chemical prices heading back up. Eventually, lithium will follow," Stormcrow president John Hykawy and managing partner Tom Chudnovsky said in their September newsletter.
Battery-grade lithium hydroxide monohydrate prices were down 8.7% in August, and battery-grade lithium carbonate prices were down 8.5%. As of 20 September, lithium hydroxide prices were down a further 6.5% and lithium carbonate was down 5%.
However, in August battery grade cobalt (II) sulphate was up 17.5% and battery grade nickel (II) sulphate was up 7.3%. As of 20 September cobalt sulphate was up another 23.5% and nickel sulphate was up 7.4%.
Drawing a contrast with the rare earths bubble, Hykawy and Chudnovsky suggested lithium was not a bubble, since unlike rare earths lithium could not be substituted with anything else.
"The demand for lithium continues to grow, there is nothing else on the horizon that will keep the automotive industry from relying on lithium batteries over the next two decades," they said.
Stormcrow notes the RMB (Chinese currency) rate of decrease has slowed ‘sharply', implying that price declines may decrease further or even go into reverse in the run up to Christmas. But the proof of the pudding seems likely to depend on how quickly EV production ramps up and to what extent consumers adopt the technology.
"The reason that the major automotive companies are actually spending billions in trying to figure out the right configurations and drivetrains for electric or electrified vehicles is precisely because they believe that not only can they build these vehicles, but that they will be able to sell them to consumers who will recognize their advantages and that the automotive companies can make more per vehicle than they do selling internal combustion-driven vehicles today," said Hykawy and Chudnovsky.
"Whenever a group of people that knows their business as well as the people within the automotive industry do believe something as fundamental as this, then if you are a sceptic it is worth looking at how your assumptions might be wrong. Because they probably are."
In a report released on Friday, the World Economics Forum painted a eulogistic picture of the potential of batteries to transform the global economy - but market observers were quick to caution that the current low price of lithium could lead to delays, with the necessary expansion of production being difficult to achieve within the necessary timeframe.