What is the projected lithium price for 2024?

2 min read | November 27, 2023 08:07 PM AEDT | By Team Kalkine Media

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Shareholders of ASX-listed lithium companies, including Allkem Ltd (ASX:AKE), Core Lithium Ltd (ASX: CXO), Liontown Resources Ltd (ASX:LTR), and Pilbara Minerals Ltd (ASX: PLS), have been closely monitoring the tumultuous journey of lithium prices. As price takers in the lithium market, these ASX-listed stocks are significantly impacted by the fluctuations in commodity prices. The once lucrative profits generated by ASX-listed lithium miners in 2022 have given way to a challenging landscape in 2023, with lithium prices experiencing a substantial decline.

Lithium Prices in 2022: A Recap

In 2022, lithium prices were at their peak, providing substantial profits for miners. The average prices were as follows:

Lithium carbonate: US$59,868 per tonne
Lithium hydroxide: US$67,568 per tonne
Spodumene 6%: US$4,368 per tonne

However, the scenario took a drastic turn in 2023, witnessing a significant plunge in lithium prices. The latest spot prices, as reported by Goldman Sachs, reveal the extent of the decline:

Lithium carbonate: US$17,076 per tonne
Lithium hydroxide: US$14,663 per tonne
Spodumene 6%: US$1,580 per tonne

This represents a staggering decline of 71.5%, 78.3%, and 64%, respectively, from the peak prices of 2022.

2024 Forecast: A Gloomy Outlook

Goldman Sachs, known for its accurate forecasts, does not foresee much respite for lithium prices in 2024. The broker continues to predict further declines in the coming year. The forecast for 2024 is as follows:

Lithium carbonate: US$13,377 per tonne
Lithium hydroxide: US$14,263 per tonne
Spodumene 6%: US$1,250 per tonne

This outlook paints a challenging picture for lithium miners, indicating a prolonged period of pricing pressure. Shareholders and industry participants will need to navigate this challenging landscape strategically.

Beyond 2024: A Glimmer of Hope

While Goldman Sachs anticipates a further decline in 2025, it suggests that this might mark the bottoming-out phase for lithium prices. The forecast for 2025 is not provided, but the mention of a potential bottoming suggests a gradual recovery beyond 2025.

Conclusion

The journey of lithium prices in 2024 appears challenging, with the market grappling with oversupply and slowed demand growth. Companies in the ASX lithium sector must adopt resilient strategies to weather the storm, focusing on operational efficiency and exploring avenues for innovation. Shareholders should stay informed about market dynamics and be prepared for a potentially extended period of subdued lithium prices.

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