Citi slashes lithium outlook by 40%… Battery division warns of two-year supply glut

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Major U.S. investment bank Citigroup cut its lithium price forecast by up to 40%. The bank determined that the lithium market will shift into a state of oversupply over the next two years due to slowing battery demand and expanding supply.

According to mining specialist Mining.com and Bloomberg, Citi lowered its lithium price outlook for the next two years on the 2nd (local time). The target price for lithium carbonate was cut by 40% from $20,000 per ton to $12,000 per ton, while the forecast for spodumene, a lithium ore, was reduced by 40% from $2,000 per ton to $1,200 per ton. The price target for lithium hydroxide was also lowered from the previous $17,000 per ton.

Citi cited slowing growth in battery demand, expanding trade uncertainty, and economic factors as reasons for the downward revision. Citi stated, "Consumers are highly likely to postpone purchases and keep inventory at a minimum." It also noted that next year's demand is highly uncertain, and in the short term, market sentiment and investor positions will determine prices rather than supply and demand dynamics.

Supply is on an increasing trend. Citi expects supply to improve by 2027. The bank forecasts that with the addition of two new projects being pursued by Rio Tinto in Argentina's Catamarca province, among others, the market will move from balance into oversupply over the next two years. CATL, the world's largest battery maker, has also been granted environmental approval to resume production at its lithium mine in Jianshi, Jiangxi Province, China, which halted operations last August. The market views this as an additional factor for further price declines.

Prices have already fallen significantly. Lithium carbonate futures, the most actively traded contract on the Guangzhou Futures Exchange, were traded at 91,160 yuan (approximately $13,710) per ton on the 2nd, up 1.2%, but have dropped more than 40% since late August. Chinese lithium carbonate futures have been in a downtrend for ten consecutive months. Concerns over electric vehicle demand also grew after the European Union (EU) and China reached an agreement on export volumes of Chinese-made HYBE lead-acid batteries.

Long-term demand outlook was maintained. Battery demand itself is also increasing. According to market research firm SNE Research, global electric vehicle battery usage from January to September this year was 994.5 GWh, a 19.7% increase year-on-year. Lithium consumption is expected to grow to about three times the current level by 2050 due to the expansion of electric vehicles and energy storage systems (ESS). Analysis also indicated that meeting this demand may require 134 new mines and approximately $100 billion in investment.

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*This content was translated by AI.View Original