Lithium prices (LTH=F) continue their descent from 2023 highs. Mining operators believe the mineral is due for a rebound tied to commodity demands. Yahoo Finance Senior Reporter Ines Ferré highlights forecasts from lithium players, citing the compound's intricate relationship with EV manufacturing projects.
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Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
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AKIKO FUJITA: Well, lithium prices spiked back in 2021 before crashing back to Earth at the end of last year, but it could just be the beginning of the fallout. Let's bring in Yahoo Finance's Ines Ferre who's been tracking prices for us. Ines, how much of this is really tied to the EV demand, obviously, lithium being a key ingredient there?
INES FERRE: Yeah, that's right. Well, a lot of this is tied to the slowing EV demand and we did see prices really crashing over this past year, as you had mentioned. And we have a chart to show you just how much they have fallen.
But look, it's no question that there's an oversupply right now in the market of lithium. China dominates this market. You do have us players in the market as well. And you've got companies in North America that have been really expanding their plans to mine lithium, to extract lithium, to refine it.
Albemarle posted its results this week. And analysts were glad that the company is going to be spending less now that the prices are down for lithium because it really doesn't make sense to go through with so many projects, scaling projects if you are seeing the prices of lithium so low. That adage in the industry that the low prices are low prices. Albemarle saying that it is going to be scaling back a project in South Carolina. It also had announced some layoffs at the end of January.
Piedmont Lithium is another company that also announced layoffs. We interviewed their CEO earlier this week about the lithium market and he said we're clearly in a bear market. What does this mean? It means that projects are being delayed. It means that some projects are being sidelined.
And look, there's no question that the longer that interest rates stay at an elevated rate, the cost of capital obviously is higher. So until that EV demand comes back, these companies are sort of in this bear market. Now, I will say that everyone that I've spoken to in the lithium space believes that the EV slowdown is exaggerated. They do believe that this is going to come back to a deficit of supply in the market, it just depends how long.
AKIKO FUJITA: Yeah, we've heard over and over that there is a second wave that's coming. This is kind of the lull in between. But of course, we're going to be watching what that means for lithium demand moving forward. Ines Ferre, thanks so much for that.
