Lithium Metal Prices Experience Sharp Decline in US Market Amidst High Extraction Rate

The price of Lithium Metal experienced a sharp decline in the US spot market as the price dampened by more than 11% amid a high lithium extraction rate in the Second Half of September 2023. The demand from the downstream automotive and battery-producing industries remains at a lower level as the US economic condition remains uncertain. The US government plans to expand the downstream battery industries in the upcoming weeks, indicating a healthy market for Lithium Metal in the forthcoming quarter of 2023.

The supply of Lithium Metal remains on a higher edge as the extraction rate in various mines in the USA and overseas markets increased. South Korea's LG Chem Ltd has partnered strategically with China's Huayou Group subsidiary, Youshan, to construct a joint Electric Vehicle (EV) battery material manufacturing facility in Morocco. This move is part of LG Chem's effort to diversify its product portfolio within the EV sector and has increased the domestic Lithium Metal inventory level. Huayou Group's decision to expand overseas aligns with the trend among Chinese EV, Lithium Metal, and battery companies, aiming to establish a closer presence with foreign clients and take advantage of local incentives. Furthermore, Huayou's listed unit, Zhejiang Huayou Cobalt Co, has revealed its plans to collaborate with LG Chem in building additional plants in Indonesia and Morocco. The Morocco-based facility, scheduled to commence production in the coming years, has targeted an annual output of 50,000 tonnes of Lithium-Phosphate-Iron (LFP) cathode materials, sufficient for approximately 500,000 entry-level EVs. This partnership reflects the global growth ambitions of both companies in the booming EV market.

Meanwhile, Lithium Metal supply surges as Geologists make a groundbreaking discovery, unearthing what could be the world's largest lithium deposit located in an ancient supervolcano straddling the Nevada-Oregon border. This deposit boasts a staggering 40 million metric tons of lithium, valued at approximately $1.5 trillion, within a 28-mile-long stretch of the McDermitt Caldera. With this discovery, Bolivia's salt flats, the previous record holder, might potentially account for less than half of the world's known Lithium Metal deposits. This showed a rise in Lithium Metal sources and dampened the market condition for Lithium Metal in the USA. Meanwhile, the demand from the downstream industries remains on a lower edge as the US economic condition remains uncertain this month. The competition from overseas Chinese auto manufacturers kept the buying rate of US vehicles on a tight edge, keeping the Lithium Metal consumption rate plunging.

According to ChemAnalyst, the price of Lithium Metal remains low and is expected to remain stable until the US market recovers and regains its growth rate. The demand is anticipated to surge in the last quarter of 2023 as the consumption from the end-use battery industry will rise along with expansion in the electrical vehicle sector. Additionally, the rising demand for renewable energy sources will uplift the market trend for Lithium Metal across the US spot market.