What will the lithium price be in 2025?

Where are lithium prices going in the coming years?

| More on:
A brightly coloured graphic with a silver square showing the abbreviation Li and the word Lithium to represent lithium ASX shares such as Core Lithium with small coloured battery graphics surrounding

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Lithium prices have been booming again in 2022
  • Can the white metal continue its positive run?
  • Goldman Sachs expects prices to tumble from recent highs in the coming years

While commodities have been strong in 2022, few have been as strong as lithium.

Thanks to seemingly insatiable demand in the electric vehicle market and tight supply, prices of the white metal have surged higher.

Lithium prices continue to rise

The good news for current miners of the battery making ingredient is that lithium prices are expected to remain strong during the current quarter.

For example, Allkem Ltd (ASX: AKE) recently advised that it expects to command spodumene concentrate prices of US$5,000 per dry metric tonne and lithium carbonate prices of US$35,000 per tonne during the June quarter.

This is up from US$2,178 per dry metric tonne and US$27,236 per tonne, respectively, during the March quarter.

Furthermore, to show how far lithium prices have come, the release highlights that Allkem was commanding US$796 per dry metric tonne for spodumene concentrate in the September quarter and US$5,853 per tonne for its lithium carbonate during the March 2021 quarter.

Clearly, these are boom times for Allkem and other producers such as Mineral Resources Limited (ASX: MIN) and Pilbara Minerals Ltd (ASX: PLS).

But what about the many lithium developers and explorers on the ASX boards?

Where are lithium prices going?

Commodity prices have a tendency to move in cycles. At the current moment, prices appear to be nearing the top of the cycle thanks to the aforementioned strong demand and tight supply.

However, high prices attract more supply and eventually when that supply floods into the market and satisfies demand, prices will start to fall.

So, what should shareholders of future lithium miners AVZ Minerals Ltd (ASX: AVZ), Core Lithium Ltd (ASX: CXO), Lake Resources N.L. (ASX: LKE), Liontown Resources Limited (ASX: LTR), and Vulcan Energy Resources Ltd (ASX: VUL) be expecting?

Lithium carbonate

According to a recent note out of Goldman Sachs, its analysts are expecting lithium carbonate prices to average US$46,640 per tonne in 2022. However, from 2023 onward it is expecting a sizeable decline.

The broker’s commodities team expects lithium carbonate prices to fall to:

  • US$20,500 per tonne in 2023
  • US$17,180 per tonne in 2024
  • US$14,468 per tonne in 2025.
  • Long run average of US$11,500 per tonne

What about spodumene concentrate?

It is a similar story for spodumene concentrate (6% li2O), with Goldman expecting an average of US$3,679 per tonne in 2022 before a sizeable pullback thereafter.

It is forecasting spodumene concentrate prices to be:

  • US$1,750 per tonne in 2023
  • US$950 per tonne in 2024
  • US$900 per tonne in 2025
  • Long run average of US$800 per tonne

In light of this, it would be worth considering just how profitable (or not) some lithium explorers and developers will be once prices normalise again.

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

Three happy miners.
Resources Shares

Broker sees 23% upside and a huge yield for BHP shares

BHP shares could offer the winning combination of strong gains and big dividends...

Read more »

Two excited mining workers in yellow high vis vests and hardhats shake hands to congratulate each other on a mineral discovery that is making the Galileo Mining share price rise today
Broker Notes

Guess which ASX 200 mining shares these experts are backing

These two ASX 200 shares are benefitting from Australia's current mining boom.

Read more »

Rede arrow on a stock market chart going down.
Resources Shares

Down 9% in a week, what’s going on with the Chalice Mining share price?

It's been a rough week – and year – for the Chalice Mining share price.

Read more »

Young boy wearing a red hard hat frowning with his hands on his head.
Resources Shares

Why are ASX 200 mining shares having such a dire week?

Investors are concerned about slowing commodity demand from China and a potential global recession.

Read more »

Woman looks amazed and shocked as she looks at her laptop.
ESG

Own BHP shares? ‘Almost unbelievable’ breakthrough could be key to miner’s climate strategy

The Federal Government is considering whether carbon stored in tailings dams will count towards carbon credits and offset schemes.

Read more »

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Dividend Investing

Here’s the BHP dividend forecast through to 2024

BHP's dividends could be very juicy in the coming years...

Read more »

Happy man in high vis vest and hard hat holds his arms up with fists clenched celebrating the rising Fortescue share price
Resources Shares

Here’s why analysts rate these ASX 200 mining shares as buys

Here are two mining shares rated as buys...

Read more »

a small boy dressed in a superhero outfit soars into the sky with a graphic backdrop of a cityscape.
Broker Notes

Could ASX lithium shares be set for a boost?

A top broker's upgrade on its lithium price forecast bodes well for ASX lithium shares, which have lost major value…

Read more »