Transition of Lithium: From Low to High Demand in Long Term

Well, arguably, Lithium is the lightest metal in a given condition and is one of the widely used solid elements in various spheres. While the accurate estimate of lithium stock is hard to calculate, but as per the US Geographical Survey (USGS), the estimated reserve could well reach 17 Million tons across the world. Ideally used in Electronics, Electrical equipment, ceramics, glass, and in lubricating greases, lithium always saw an upsurge in demand and supply till early 2020.

Covid-19 Pandemic Blow
Since the first quarter of 2020, lithium has seen its downfall in demand. The global economy at its lowest point and industries are suffering most along with other verticals. The steady and growing demand of 40% lithium in the industries has fallen in this year already and there is little chance to reach the optimum requirement in 2020. Experts are eyeing for 2021 where they are expecting sustainable growth in lithium demand. With supply is still at a higher level and overall demand has decreased, products have been shelved for several months. This results in a blow in the economy as well as a break in the demand-supply chain.

High Demand Areas
Due to its high electrode potential, lithium has become an important component in a battery. Lithium batteries and lithium-ion batteries are the best examples of it. While lithium batteries were disposable ones, Lithium – Ion ones are rechargeable with higher energy density. With the increasing demand for lithium-ion batteries in various sectors, especially in electronics, the sky is bright and clear. Nowadays researchers have gone beyond it and are testing the probability of lithium-ion polymer and lithium-ion phosphate batteries in our everyday applications.

Lithium Production & Reserve
South American countries continue to produce lithium more than anyone else. Chile, Argentina, Brazil are the leaders in lithium production as well as in reserve stock accumulation. Next come countries like Australia, China, Zimbabwe. Out of which, China is a dominant player in this field. They always had a high demand for lithium although, in 2020, the curve is falling as per reports received from big players like Morgan Stanley. The automation process in EV battery production has put on hold than the estimation that resulted in a surplus in lithium instead of batteries. It is suspected that the price will fall considerably due to the pandemic outbreak although the demand will be on the higher side keeping the long term requirement in consideration. If things are recovered in 2021, then one might see an upsurge of battery prices in the year 2022 or before.

2020 Forecast by Industry Experts
Analysts like Morgan Stanley fears a continuous downfall of lithium output in this year if Covid-19 keeps on the same pace. A forecast of a 7% fall is estimated and the figure could be more if the global pandemic reaches a new high. Others like Credit Suisse also hints at the rapid reduction of prices in 2020. There might be a cash shortfall in every sector and one needs to consider either equity raising option or declare corporate debt in the 1st quarter of 2021.

Demand to Rise in 2021
Market Analysts predict that the growth is imminent and is only prohibited due to recent issues. Once this is over, rapid expansion in the lithium-ion battery industry is on the cards. Growth will be driven by the demand for electric and hybrid vehicles along with energy storage systems. Global demand for lithium is expected to rise 8.9% every year and apart from the electronics sector, glass and ceramics market will also contribute a lot to this potential growth.
Asia Pacific region will be the major gainer in the entire process starting from 2019 where China already dominating the world lithium market due to its massive production of items using lithium. A close eye is on China now especially after a tussle with the US first and then with India, still China expected to register the highest contribution again once the pandemic is over.

New Babies on the Blocks
While we generally call lithium, it is lithium carbonate that is used in batteries, ceramics, and glasses. However, lithium hydroxide is quickly replacing lithium carbonate due to its better performance in lithium-ion cathode applications. In the coming days, there will be no wonder if only lithium hydroxide is used extensively.

Rays of Hope
Considering the historical demand of lithium along with the forecasts of product and market, it is only a matter of time for lithium to again reach the optimum usage. Soon, the demand and supply gap will be mitigated and newer applications are bound to come. This is a metal tagged with a heavy price that is used in many sectors, hence the industry just has to wait for some months before it reaches the maximum.