The Lithium market's increase to all-time highs may slow down a bit in 2022. However, Bank of America believes that this is only the beginning of a larger movement in the long term.
Bank of America's commodities analyst, Michael Widmer, said supply and demand fundamentals for batteries support current prices.
According to Benchmark Mineral Intelligence, Lithium is up nearly 300% last year. They said that Lithium prices exceeded $40 per kilogram at the beginning of the year. Some analysts are predicting prices could rise above $50 per kilo by the end of 2022.
Widmer added that prices could stabilize at current levels this year since more offers appear on the network; however, any lull in the market will be temporary, as the metal for batteries continues to face growing demand and small supply.
In the latest Lithium forecast of the Bank of America, they said they expect its demand to grow by an average of 28% by 2025.
For the next three years, supply will remain tight, while demand will continue to rise as the world moves towards more sustainable green energy. Bank of America noted that Lithium demand is expected to rise to 3 million tons by 2030 and 5 million tons by 2050.
Widmer believes that every pipeline project should be put into operation on time and with the promised volume to prevent a significant short-term price impact.
It will be difficult for manufacturers to maintain supplies to the Lithium market.
The most significant demand for Lithium comes from the electric vehicle market.
Despite the fact that higher prices may have a moderate impact on the demand for electric vehicles, Widmer noted that supply constraints currently remain an important factor affecting prices. He added that over the next 10-30 years, companies will have to double their capital investments in order to achieve current demand targets.
