Industry News
The global battery lithium metal market is showing preliminary signs of recovery
The spot price of lithium carbonate in China, a key material used to power electric vehicles, has rebounded to its highest level since December last year after plummeting more than 80% in 2023. Meanwhile, at the Guangzhou Futures Exchange, the most active futures contracts have risen by over one-fifth in the past month.
Given the role of lithium in batteries, it is a crucial commodity for energy transformation. However, last year, global oversupply led to a significant drop in lithium prices. Despite market turbulence, major producers remain confident, with Albemarle Corp., ranked first, insisting that low oil prices are unsustainable, and SQM, ranked second, continuing to expand due to its optimistic outlook.
The sharp drop in oil prices has prompted some producers to reduce production. Among them, Core Lithium Ltd. has suspended some mining operations to reduce cash costs, citing a "significant drop" in prices.
UBS Group AG stated in a recent report that "the lithium market is rebalancing, and the industry is reducing production and projects." It also warned that there is still excess in the lithium market. Progress has been made in overall balance, "but we emphasize that if price sentiment rises too far or too quickly, this may be temporary," the bank added.
In China, the focus of industry attention is on speculation that environmental remediation in supply centers may exacerbate supply disruptions, thereby exacerbating production cuts in the West.
However, not everyone believes that the economy will rebound. Goldman Sachs Group Inc. stated in a report that the rebound in lithium contract prices should not be interpreted as the end of a bear market. It warns that the trade surplus remains considerable.
Alan, an analyst at Bloomberg NEF? Ray? Allan Ray Restauro also maintains a cautious attitude. "The recent price increase may be a direct impact of China's environmental actions," he said. He stated that there is no clear indication that oil prices will continue to rise, as despite reduced supply and project slowdown, supply will exceed demand.
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