Last week, Pilbara Minerals Ltd (ASX: PLS) released its quarterly update and reported yet another sharp decline in its average realised lithium price.
And while the company didn't provide any real financial information, it is safe to assume that its profits are continuing to be squeezed.
But will this continue to be the case or is there light at the end of the tunnel?
Let's take a look now and what Goldman Sachs is saying about lithium prices and where they could be heading from here.
Lithium price forecast
To begin with, here's how spot prices are looking this week compared to the average of last year:
- Lithium carbonate – China: US$13,619 per tonne (2023 average: US$32,694)
- Lithium hydroxide – China: US$9,597 per tonne (2023 average: US$32,452)
- Spodumene 6% – US$1,240 per tonne (2023 average: US$3,712)
But where next for lithium prices from here? Let's see what Goldman is forecasting for lithium prices out as far as 2027.
Lithium carbonate – China:
- 2024: US$11,106 per tonne
- 2025: US$11,000 per tonne
- 2026: US$13,323 per tonne
- 2027: US$15,646 per tonne
Lithium hydroxide – China:
- 2024: US$9,849 per tonne
- 2025: US$12,500 per tonne
- 2026: US$14,323 per tonne
- 2027: US$16,146 per tonne
Spodumene 6%:
- 2024: US$928 per tonne
- 2025: US$800 per tonne
- 2026: US$978 per tonne
- 2027: US$1,155 per tonne
What is this based on?
Goldman has provided investors with its supply and demand model that it uses to justify its bleak forecasts.
The broker certainly agrees that demand for the battery material is increasing and will continue to increase.
It is forecasting global demand for lithium carbonate equivalent (LCE) to increase by the following:
- 18% in 2024 to 1,169,000 tonnes
- 28% in 2025 to 1,501,000 tonnes
- 20% in 2026 to 1,796,000 tonnes
- 14% in 2027 to 2,045,000 tonnes
However, while this appears to paint a very healthy picture for lithium miners like Core Lithium Ltd (ASX: CXO), the broker still believes that supply will continue to outstrip demand for the foreseeable future, weighing heavily on lithium prices.
For supply, the broker is forecasting the following increases (adjusted for disruption):
- 31% in 2024 to 1,269,000 tonnes
- 39% in 2025 to 1,764,000 tonnes
- 19% in 2026 to 2,095,000 tonnes
- 14% in 2027 to 2,389,000 tonnes
Surplus to continue
All in all, including battery scrap supply, the broker expects the following surpluses in the coming years:
- 12% in 2024
- 19% in 2025
- 19% in 2026
- 18% in 2027
In light of the above, unfortunately the tough times appear unlikely to be ending any time soon.
