Lithium price volatility: where next for the market?

With the lithium-ion battery sector this year entering the terawatt era (Twh) – driven by demand from the Electric Vehicle (EV) and Battery Energy Storage Sector (BESS) – there remains little doubt over lithium’s central importance to the energy transition.

While there has been no shortage of analyses examining the challenges of scaling lithium supply to meet long-term net-zero targets, less discussed has been the role of pricing and its interaction with a more dynamic lithium market. After all, it is price signals which determine the efficient allocation of capital in any market, particularly in an immature one where China has an outsized role. The recent slump in lithium prices has triggered a range of questions in the market: how sustainable are current spot prices? Has lithium’s marginal cost of production become more dynamic compared to previous years? What next for lithium prices and pricing?

This Energy Insight sheds light on some key features of lithium’s evolving pricing landscape; the drivers of volatility in the market; and the implications ahead as lithium’s journey to market maturity continues apace.

By: Ahmed Mehdi