EV demand continued its 'rapid growth trend' despite deteriorating economic conditions, with global sales up 40% in the nine months to September 2022, according to the Australian Government's commodity forecaster, the Office of the Chief Economist (OCE).
"Strong underlying demand and EV manufacturers’ declarations of further increases in production, imply that EV sales could reach almost 40% of annual vehicle sales by 2030," the OCE said in its Resource and Energy Quarterly report.
Global demand for lithium is forecast to rise by over 40% over the next two years from 745,000 tonnes in 2022 to 1,091,000 tonnes by 2024, according to the OCE. Meanwhile, global output was 551,000 tonnes in 2021 and forecast to reach 1,087,000 tonnes in 2024.
"A supply gap is forecast to persist over the outlook period, with total supply from both mine and brine operations currently insufficient to meet demand," the report said.
"With new lithium projects being developed rapidly, the supply gap is expected to reduce over the outlook, but will take time to close."
Lithium spodumene concentrate average around US$6,100 a tonne in November 2022, up 6.4% month-on-month and up more than 300% year-on-year. The report notes that most Australian producers are locked into long-term contracts, which take time to adjust to moves in spot prices.
"High prices reported by Australian producers confirm spot prices are now flowing more rapidly into contract prices," it said.
"Prices are expected to grow further next year as contract prices reset in the September quarter 2022, averaging US$4,010 a tonne in 2023 before moderating to US$3,130 in 2024."
Similarly, lithium hydroxide prices are forecast to rise from US$17,370 a tonne in 2021 to US$39,900 in 2022 and US$61,200 in 2023 before moderating to US$48,500 by 2024.
The value of Australian lithium exports are forecast to more than triple from $4.9 billion in 2021-22 to $16.1 billion in 2023.
To add some perspective, iron ore, coal and copper exports generated $133 billion, $68 billion and $13 billion respectively in 2021-22.
The OCE expects Australian miners to continue their expansion into higher value-add activities such as refining into precursor chemicals for cathodes, electrolyte production, battery anode plants and battery manufacturing.
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