Albemarle upgrades lithium forecasts

US lithium giant Albemarle has increased its 2030 lithium carbonate demand estimates by 15%.
Albemarle upgrades lithium forecasts Albemarle upgrades lithium forecasts Albemarle upgrades lithium forecasts Albemarle upgrades lithium forecasts Albemarle upgrades lithium forecasts

The company now believes 2030 demand will reach 3.7 million tonnes of LCE, five times higher than current levels, due to the US' Inflation Reduction Act and strong electric vehicle demand.

It noted EV sales rose by 72% year-on-year in 2022 with market penetration to reach 48% by 2030, representing a compound annual growth rate of 25-30%.

Albemarle said incentive prices of more than US$20 per kilogram would be required over the next decade to support the more than 100 new projects required to support demand.

The company suggested lower-grade, higher-cost projects would need to be brought on to fill the supply gap.

Even then, Albemarle echoed comments by Pilbara Minerals boss Dale Henderson last week about how hard it is to bring new supply on.

The company said lithium mines built in Australia between 2007 and 2015 took 7-10 years to reach production, while hard rock mines in the US and Canada took 15-16 years.

Integrated operations in the Americas had taken anywhere from eight years (Argentina) to 23 years and counting (Serbia).

Lithium expert Joe Lowry thanked Albemarle via Twitter for a "pragmatic" demand estimate.

"In rough numbers we need 3Mt of new supply by 2030," he said.

"No credible party thinks that happens. Comical how much ‘smart money' laughed at my call of an ‘oversupply myth' in 2018."

UBS this week upgraded its spodumene and chemical pricing forecasts by 50% and expects EV sales to jump 31% this year.

"Lithium markets and equities have traded in anticipation of a demand 'air pocket' whereby supply would catch up to slower demand in Europe and China," the bank said.

"But with rapid COVID reopening in China and growing expectations for a sales rebound post Chinese New Year, we refresh our outlook.

"We believe lithium markets will remain in deficit for the near and medium term before moving to structural deficit long term.

"This needs a demand rationing price, for which we have seen no evidence in the past 12 months despite record high prices that are orders of magnitude above costs."

Reflecting higher price forecasts, UBS upgraded Mineral Resources and IGO from neutral to buy and lifted price targets by 27% each.

Pilbara was upgraded from sell to neutral with a 38% boost to its price target.

It retained a buy rating for Allkem and hiked its price target by 9%.