Lithium Prices Rise 5 Times in One Year... Raw Material Costs Continue Strong Uptrend This Year

Electric Vehicle Demand Surges, Supply Chain Disruptions Last Longer Than Expected
Geopolitical Risks Including Rising Ukraine Tensions Compound Issues
Carbonate Lithium Demand Rises from 490,000t to 610,000t... Supply Shortage Also at 26,000t

[Asia Economy Reporter Park Byung-hee] Prices of major minerals used in industrial applications are expected to continue their strong upward trend this year.

This is because the energy industry structure is being reorganized from fossil fuels to renewable energy, leading to a surge in demand for electric vehicles (EVs), and EVs are having significant ripple effects on other industries including semiconductors. Additionally, supply chain disruptions that began last year are lasting longer than expected, and recently, geopolitical risks such as the Ukraine crisis have compounded, increasing instability in raw material supply and demand.

In particular, lithium, which is used as a key material for EV batteries along with nickel, is considered to have entered a supercycle. On the 20th (local time), Bloomberg New Energy Finance forecasted that lithium demand in the battery sector will increase to five times the current level by 2030 due to the rapid surge in EV sales.

As EV demand has surged, lithium prices have already increased fivefold over the past year. Global EV sales are estimated to have more than doubled from 3.1 million units in 2020 to over 6.36 million units last year.

Benchmark Mineral Intelligence (BMI), a UK-based commodity market research firm, projected that lithium carbonate demand will rise from 490,000 tons last year to 610,000 tons this year. Due to increased demand, the supply shortage is also expected to grow from 12,000 tons last year to 26,000 tons this year. Global energy information and analytics company S&P Global Platts has forecasted that lithium shortages could reach 220,000 tons by around 2030.

The price of another battery material, cobalt, recently exceeded $72,000 per ton, marking the highest level since June 2018. Cobalt prices have risen more than 45% over the past year. Supply has been disrupted since the Omicron variant emerged in South Africa, a major cobalt-producing region. Notably, the Democratic Republic of Congo accounts for 70% of the world's cobalt supply.

The Ukraine crisis is exacerbating semiconductor supply concerns. Russia and Ukraine are major exporters of neon, palladium, and other materials essential for semiconductor production. According to the U.S. International Trade Commission (ITC), neon prices surged 600% when Russia invaded Crimea in 2014. Russia is the world's largest exporter of palladium.

Helium prices, necessary for semiconductor manufacturing, are also rising sharply. The Federal Helium Reserve in Texas, USA, halted helium auctions at the end of last year due to declining helium stocks. In 2019, the winning bid price for helium was $280 per 1,000 cubic feet (Mcf), but by the end of last year, it soared to $600 per Mcf.

Prices of other industrial raw materials are also on the rise. Aluminum prices have increased 54% over the past year, while tin and zinc prices have risen 74% and 25%, respectively.

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