While the market has been having a turbulent time in 2022, the same cannot be said for ASX lithium shares.
A good number of these shares have delivered mouth-watering returns for their investors since the turn of the year.
This has been driven by booming lithium prices and the growing number of analysts bumping their forecasts higher to reflect the insatiable demand for the white metal.
Where are lithium prices heading?
According to a note out of Bell Potter, its analysts have lifted their lithium price forecasts through to 2024.
Though, it is worth noting that the broker does expect lithium prices to peak this year. So, lithium developers such as Vulcan Energy Resources Ltd (ASX: VUL) may not benefit from the high prices that are being commanded today unlike actual producers Allkem Ltd (ASX: AKE) and Pilbara Minerals Ltd (ASX: PLS).
Here are the forecasts:
Spodumene concentrate per tonne
- 2021A US$1,102
- Spot US$6,750
- 2022E US$5,353
- 2023E US$4,735
- 2024E US$1,775
- Long-TermE US$1,300
Lithium carbonate per tonne
- 2021A US$16,155
- Spot US$73,500
- 2022E US$67,920
- 2023E US$55,000
- 2024E US$32,500
- Long-TermE US$25,000
Lithium hydroxide per tonne
- 2021A US$17,221
- Spot US$77,000
- 2022E US$69,605
- 2023E US$57,750
- 2024E US$37,000
- Long-TermE US$29,000
Bell Potter expects these prices to be underpinned by strong demand and slower than expected supply increases. It commented:
Around half of the world's lithium is supplied by Australia's hard rock mines. Expansions at existing operations and greenfield mine developments are likely to be the first responding and lowest risk projects in meeting the growth in lithium demand. Our outlook for Australian supply compiles recent company announcements. In the current inflationary and logistically constrained economic environment, we see this collective outlook as aspirational. Over the next five years, growth in Australian supply will at best meet only one third of total growth in lithium demand. New supply will also come from new and expanding brine projects. However, prolonged ramp-up, technical challenges and sovereign risks are likely to constrain these riskier developments
