@gassin123 posted this on LMG thread The outlook for Lithium...

@gassin123 posted this on LMG thread

The outlook for Lithium
Lithium currently trades for around $6,000 per tonne. We cannot give an exact price quote as there is no spot market, Lithium prices are posted by the producers and are subsequently negotiated directly with consumers. Over the 12 years from 2000 to 2012, lithium advanced from $2,000 to $6,000 per tonne, at a rate of 9.6 per cent per annum. Many industry observers expect the price to continue its upward trend at similar trajectories. Indeed, the major producers recently increased prices for battery grade lithium by a further 15 per cent.


A contributing factor to the rise in the lithium price has been the increasing use of smartphones and other devices that run off lithium-ion batteries. However, the future of lithium is set to be further influenced by its use in electric cars and power storage for the home. Roskill estimates lithium demand is growing at 11 per cent out to 2017, or 15.7 per cent on its optimistic forecast as demand for rechargeable batteries increases towards 50 per cent of total demand.


By 2020, the capacity of lithium-ion battery manufacturing is set to triple, led by Tesla’s 35GWh Giga factory in Nevada. It follows that lithium demand is likely to also triple over this longer period, with no signs of slowing thereafter as the second order effects of the increased supply ripple through the industry.
Assuming we take these demand forecasts as given, the important question then becomes one of supply. Can the world ramp up lithium supply to meet demand, or will the lithium price have to appreciate to reflect the imbalance?

Lithium Supply
The following chart is the global lithium supply curve according to Orocobre (ASX:ORE).

It seems the lithium supply question is not whether we can find enough, but rather whether we can expand current production capacity in sufficient time to meet demand.
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