ANKARA: The lithium market is experiencing a period of transition with slowing demand growth as the industry adjusts to changing dynamics, according to the report by UK-based global research and consultancy group Wood Mackenzie on Wednesday.
The report entitled Lithium: Five Things to Watch in 2024 suggests that while lithium remains a crucial raw material for batteries, its growth rate is decelerating due to a maturing market, subdued electric vehicle (EV) sales and a declining intensity of use within evolving cathode chemistries.
In 2023, the lithium market experienced a downward price trajectory, signaling a shift towards a supply surplus.
The continuous destocking of inventories primarily drove this decline, which had a negative impact on prices. Looking ahead to 2024, Wood Mackenzie anticipates that the destocking trend will persist, further influencing the lithium industry.
Lithium supply chain under pressure as prices continue to decline
According to Wood Mackenzie, the higher-cost sectors of the
lithium supply chain, particularly the large lepidolite operations in China and direct-shipping-ore (DSO) supplies for processing and refining, are feeling the pinch.
However, these sectors are considered marginal producers, and the core of the cost curve and potential output reductions warrant closer examination.
Wood Mackenzie’s analysis reveals that several new resource projects and conversion projects are set to start in 2024.
“Each project will face unique commissioning challenges, regardless of the company’s experience,” the report said, adding that mining companies will face challenges related to the ore body and concentration of the ore, while brine projects will have to contend with the variability of the resource.
Commenting on the recent report, Allan Pedersen, principal analyst for lithium at Wood Mackenzie, said that global plug-in EV sales are projected to rise by 33% this year, a significant drop from the average annual growth rate of 71% between 2021 and 2023.
“Lower government incentives
and inadequate charging infrastructure are expected to curtail EV sales in 2024. This shift in the EV market will have implications for lithium demand, “he explained.
Source: Anadolu Agency