Electric Vehicle Demand Surges, Lithium Prices Soar 65% in 2 Months

Recovery Begins After 3 Years of Slump Following US Presidential Election
"Supply Shortage Due to Reduced Mining Expected to Persist for Some Time"

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] This year, international lithium prices have soared over 60% in just over two months since the beginning of the year, continuing their high-flying trend. After nearly three years of decline since 2018, lithium prices have surged sharply due to a surge in demand for electric vehicle batteries starting late last year, raising concerns about supply shortages.

According to the Wall Street Journal (WSJ), on the 10th (local time), the price of lithium carbonate for electric vehicle batteries in the Chinese spot market announced by the London Metal Exchange (LME) was 80 yuan (about 14,000 won) per kilogram, up 65% from 48.5 yuan at the beginning of the year.

Lithium prices soared to 153.5 yuan in April 2018, when the electric vehicle market began to expand, but then declined for nearly three years due to falling international oil prices and the Trump administration’s oil-friendly policies. In September last year, amid concerns that vehicle demand would sharply drop due to the COVID-19 pandemic, prices fell to 34 yuan. This price slump significantly reduced demand for lithium production and mining investment.

The stagnant lithium prices began to reverse starting from the U.S. presidential election in November last year. The electric vehicle sector was highlighted as a key project of the Green New Deal, a major environmental policy pledge of U.S. President Joe Biden, and as vaccinations increased and the spread of COVID-19 eased, vehicle demand recovered faster than expected, acting as a positive factor. Following the U.S. and Europe, electric vehicle sales in China also surged, with global electric vehicle sales last year increasing sharply by 44.6% year-on-year to 2.94 million units.

Experts predict that even after supply shortages are resolved, steady growth in demand for electric vehicle batteries will continue, leading to a stable upward trend in lithium prices. James Geary, a researcher at global analytics firm CRU, said, "The short-term surge in lithium prices is due to mining companies not increasing investments until now, and as mining investments rise again, prices will continue to fluctuate in the short term depending on supply conditions," adding, "Since demand driven by environmental policies continues, the medium- to long-term price increase trend is expected to continue."

This content was produced with the assistance of AI translation services.