Producers rushing to add lithium capacity as EV demand soars: BMI

Lithium prices are continuing to rise and producers are rushing to bring online added capacity, price reporting agency Benchmark Mineral Intelligence says.

 Image: Ojeh

Image: Ojeh

It said its lithium price index was up 10% for April, primarily driven by ex-Chinese price improvements, in connection with strong downstream demand and a tightening chemical market globally.

Benchmark said EV production had risen 74.9% month-on-month in China, while EV sales in Europe climbed 98.9% month-on-month, both to more than 200,000 units.

The latter figure underscored a profound 156.2% increase year-on-year, Benchmark said, given European sales in March 2020 were not impacted by COVID-19.

Market tightness was pushing producers to accelerate efforts to bring expansions online and more than 90,000 tonnes LCE of additional capacity plans were confirmed in April by Yahua Lithium, AMG and POSCO, Benchmark said.

"Industry contacts continued to report to Benchmark that demand from both traditional end market applications and the battery industry had exceeded supply, with almost all lithium producers having sold out order books in the medium-term," it said.

"Given persistent efforts from the full range of heritage, luxury, and mass-production automakers to accelerate endeavours to compete in the EV growth story, the long-term demand outlook for lithium products continues to improve worldwide."

Benchmark's global weighted average lithium carbonate price rose 8.3% in April to US$11,651 per tonne.

Its weighted average lithium hydroxide price was up 13.54% to $11,709/t, and spodumene concentrate (6% Li2O, FOB Australia) gained 4.17% in April to $563/t.

Greater price transparency

Meanwhile CME Group has said it would launch Lithium Hydroxide CIF CJK (Fastmarkets) futures this week, to help market participants manage their battery metals risk amid rising demand.

The London Metal Exchange has also partnered with price reporting agency Fastmarkets to bring greater transparency to lithium pricing and is planning to launch a lithium futures contract around June 14.

Continued adoption of reference pricing across the industry had paved the way for the upcoming launch of the contract - LME Lithium Hydroxide CIF (Fastmarkets MB) - in summer 2021, the LME has said.

Its publishes weekly midpoint prices for Fastmarkets MB's key assessments for lithium hydroxide each Friday, the latest being $13/kg on April 29.

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