Citigroup upgrades battery grade lithium price forecast to $60,000 per tonne

Investment bank Citigroup has significantly upgraded its price forecast for battery grade lithium carbonate to US$60,000 per tonne, on the back of ever increasing demand from the electric vehicle (EV) market.

Lithium carbonate prices reached an all-time high last year and broke through the $40,000 per tonne barrier at the start of 2022, according to Benchmark Mineral Intelligence. The price reporting agency also reported a 45.5% monthly surge in prices for Australia’s unprocessed spodumene concentrate, which was selling at $2,400 per tonne in January.

Against a backdrop of rapidly increasing EV production and sales expectations, Citigroup said extreme lithium pricing is likely to be required to defer or destroy demand, as EV inventories continue to experience a backlog in the face of global supply chain gluts.

In response to the rising demand, global mined lithium production hit a record high in 2021 of 100,000 tonnes (excluding the US) – a 21% increase on 2020, according to US Geological Survey (USGS) data. Global lithium consumption also increased by 33% in 2021 to 93,000 tonnes.

Citigroup’s suggested price target may squeeze margins for lower range EVs, while possibly restricting non-EV related lithium demand, the firm added.