The lithium industry struggles to break free from the dilemma of low prices, with industry consensus that it is difficult to see improvement before 2030.

Global lithium producers gathered at a major industry conference this week, but their spirits were dampened by the widespread belief within the industry that the phase of low lithium prices is not yet over.

Dale Henderson, CEO of Australian lithium miner Pilbara Minerals, stated that the company is feeling the market pain. Practitioners pointed out that despite the continuous rise in demand for lithium metal, lithium prices have been declining, which is a paradoxical situation. However, there is a consensus within the industry that this "paradox" is unlikely to be resolved before 2030.

On the other hand, lithium prices have fallen by more than 90% over the past two years, dropping from over $80,000 per mt in November 2022 to $8,450 per mt in June.

In December 2022, the value of lithium contained in EV batteries sold reached as high as $3.2 billion, and the weighted average selling price of lithium-ion batteries in the EV sector peaked at over $1,900. This year, the average price of lithium batteries has dropped to just over $200.

Cost battle

Project Blue, a mineral consulting firm, predicts that lithium demand will not exceed supply until at least 2033. This means that the industry will need to live within its means for an extended period to survive.

Peter Hannah, the head of pricing at Albemarle, the world's largest lithium producer, pointed out that the lithium market is more volatile than other markets. In response to the price decline, the company has laid off staff and postponed expansion projects.

Ken Hoffman, a commodity strategist at mining investment bank Red Cloud Securities, stated that the challenge for the lithium industry lies in which mines can produce the highest quality products at the lowest cost.

Andres Fontannaz, the vice president of commercial for SQM's international lithium division, added that in addition to purely economic factors, there are other factors influencing the behavior of market participants. For example, the development of EVs has become a political goal in some countries, which may support lithium demand.