At the Future Facing Commodities Conference in Singapore, Global Lithium Founder Joe “Mr Lithium” Lowry dissected the recent tumultuous journey of lithium prices and predicted future market trends of the metal that is in the epicentre of the world’s energy transition.
"We've been through a ride in lithium price. It's been pretty dramatic," stated Lowry.
He pointed out the sharp increase to US$80,000 and subsequent fall, prompting questions about the causes of such volatility and the current pricing situation (Figure 1).
Lithium prices are showing signs of recovery, recording a +20% increase over the past month alone, after it witnessed 80% collapse in December (Figure 2).
However, several analysts are critical of an immediate rebound as surplus remains sizable.
Figure: 1: Joe Lowry’s tweet from the conference highlighting lithium prices from 2020-2023 (Source : Twitter)
“Living off the inventory”
Lowry attributed the price bubble to panic buying in 2022, coupled with excess capacity in China's lithium-ion battery supply chain, which he believes will continue to induce market fluctuations.
He observed a reactionary pattern in Chinese purchasing behaviour, stating, "When they see the price start to ease and come down, they stop buying. And they start living off the inventory."
This strategic move contributes to price instability, as stakeholders anticipate further declines before committing to new purchases.
Has lithium bottomed out?
Addressing the question of whether lithium prices have bottomed out, Lowry cautiously suggested, "I'm not going to say it has for sure, but I think it's going to happen this year."
He underscored the interconnectedness of the lithium market with the broader narrative of electric vehicle (EV) growth, which, despite being politicised, especially in the U.S., remains robust.
"When I started, there was no commercial lithium-ion battery. And now, it's really all about batteries."
This shift has significantly influenced the market dynamics and cost structures associated with lithium production and supply.
Figure 2: Lithium prices in 2023 and 2024 (Source: Bloomberg)
Critiqued Oversupply Perception
Lowry critiqued the market's oversupply perception, arguing that it often overlooks the nuanced realities of inventory drawdowns and supply chain complexities.
In his concluding remarks, Lowry urged the audience to adopt a discerning approach to market information, especially from China, and to recognise the varied landscape of lithium pricing.
He stressed the importance of diligent analysis for investors, highlighting the spectrum of prices across different markets and the need to understand the underlying factors driving these variations.
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