Lithium market to enter deficit until 2035, says Canaccord

The global lithium market is set to enter a near-decade-long deficit as a lack of mine investment weighs on supply of the EV battery metal, according to Canaccord Genuity. The graphic shows the performance of lithium carbonate futures over the past 12 months - up more than 130%.

·      In a note, Canaccord analysts say they expect to see a “material market deficit” starting in 2026, given that tightening supply has more than offset the weakness in near-term demand. This deficit, they added, could last until 2035. Even if rising lithium prices through 2027-28 could ignite a supply response, that would still fall short of their demand growth forecasts, the analysts said.

·      In recent months, lithium prices have shot up on persistent worries over supply, led by the suspension of a key mine in China, one of the world’s leading suppliers. Earlier this year, Zimbabwe, another top producer, introduced a ban on raw lithium exports, exacerbating the market conditions.

·      Canaccord’s outlook assumes no further disruptions in China and elsewhere, which could well extend the deficit beyond the projected period. According to Canaccord, the lithium market would require “significant” investment in new supply in the long term, even if there are no more supply risks and drastic changes to demand forecasts.