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| Australia Lithium |
The Office of the Chief Economist (OCE) of Australia has lowered its forecast for the country's lithium export earnings for 2024-26, citing weaker-than-expected spodumene prices. In its September Resources and Energy Quarterly (REQ) report, the OCE adjusted its forecast for lithium earnings to A$6.35bn for 2024-25 and A$8.2bn for 2025-26. This marks a significant drop from its June forecast of A$6.58bn and A$9.07bn, respectively.
Weaker Demand and Market Surplus
The revision is primarily due to declining spodumene prices, which have been impacted by lower-than-expected demand for lithium, particularly in the electric vehicle (EV) sector, where growth has slowed in 2024. This slowdown, combined with new lithium projects initiated by the high prices seen in 2022, has resulted in a market surplus. In June, OCE projected spodumene prices for 2024 and 2025 at $1,107/t and $1,227/t, but these have now been revised down to $1,056/t and $1,131/t, respectively.
Despite lower prices, Australia's lithium production is expected to increase. Spodumene production is projected to rise from 471,000 tons of lithium carbonate equivalent (LCE) in 2024-25 to 558,000 tons in 2025-26. OCE expects lithium prices to recover by late 2024 as market conditions stabilize, driven by production cuts and supply disruptions, notably from China's largest battery producer, CATL.
The current downturn has led to several production cuts or suspensions from major Australian lithium producers, including Mineral Resources, Arcadium, and Core Lithium. The outlook remains bleak, with industry experts warning that many operations may shutter if prices fail to recover soon.
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