Albemarle cuts 2030 lithium demand forecast

The world’s top lithium producer Albemarle has downgraded its 2030 forecast for global lithium demand by 10pc to 3.3mn tonnes due to slower-than-expected growth in the EV market.

Last year the firm revised the 2030 forecast up by 15pc to 3.7mn tonnes, based largely on the expected impact of the US Inflation Reduction Act (IRA).

But the firm says OEM production announcements and high levels of inventory in the battery and EV supply chain are now having a knock-on effect on lithium demand.

“Inventory [...] is in the battery and EV level of supply chain. And that is affecting apparent demand to the lithium industry,” says Albemarle president Eric Norris.

However, 3.3mn t of demand in 2030 would still represent a tripling from 2023 demand levels of 1mn t. And the firm expects a 28pc year-on-year growth in demand to 1.3mn t in 2024.

“While the pricing environment has softened for the moment, we should not lose sight of the fact that we continue to see significant long-term growth in demand for limited supply,” says Albemarle CEO Kent Masters.

Current low prices leading to delays in investment combined with expected higher levels of demand could result in a supply crunch later in the decade, the firm warns.

Lithium carbonate equivalent (LCE) spot prices have fallen from a high of $80,000/t to current levels of $13,000/t over the past year, according to thinktank the Oxford Institute for Energy Studies.

And relatively smaller volumes in the lithium market compared to other commodities mean that demand-side adjustments can have a big impact on prices.

Albemarle warns that current prices do not support the economics for new greenfield projects.

“Incentivising producers to meet demand requires long-term pricing at or above investment economics and certainly above current market pricing,” says Masters.

Current prices are below levels at which some of Albemarle’s producing assets are profitable. And the firm says it will only look to start investing in new assets if prices improve, evaluating cost efficiency on a ‘project by project’ basis.