Since H2 2019, the outlook for lithium demand has been impacted significantly by a number of issues: firstly, a slowdown in plug-in vehicle sales (including EVs and PHEVs) in the Chinese market; secondly the on-going COVID-19 pandemic which has disrupted supply chains globally; thirdly, the potential for subsequent weak economic performance in key markets.
The slowdown in the Chinese EV market saw vehicle sales decrease 33% y-on-y during H2 2019, though the subsequent impact of the COVID-19 related lockdowns has seen monthly Chinese EV sales fall to their lowest volumes since February 2017. Vehicle sales in the Chinese market are forecast to fall 39% y-on-y in Q1 2020, equivalent to a reduction of roughly 2.8kt LCE contained within Li-ion batteries.
As the impact of COVID-19 related lockdowns spreads in H1 2020, global plug-in sales in other major markets including Europe and the USA are expected to fall significantly. Falling consumer demand, disruption to upstream and downstream supply chains, and government guidelines, have now resulted in the suspension and curtailment of production at major automotive OEMs and battery manufacturers. With economic recessions forecast in Germany and Japan during 2020, and significantly weaker economic performance expected in China and the USA, sales of ‘big-ticket’ items, including plug-in electric vehicles, are expected to experience a demand shock. To this end, European and US automakers have delayed Asian Li-ion battery shipments originally scheduled for Q2 2020 amid the growing uncertainty for automotive demand.
Roskill has reassessed its lithium demand forecast for 2020 in the quarterly update to its lithium market outlook report. Total lithium demand for 2020 has been downgraded by more than 25%, as a result of the aforementioned factors. Demand from rechargeable battery applications is still expected to show growth in 2020, though at a significantly slower rate than forecast previously. Contracting demand is forecast for more industrial uses of lithium products, which are more closely tied to GDP growth, with demand in these applications forecast to fall on average by 4.5% y-on-y in 2020.
More in-depth analysis of the short-term impacts to the lithium industry, as well as Roskill’s long-term outlook for lithium supply, demand and prices, can be accessed via the Roskill Interactive portal, as part of a subscription to Roskill’s latest lithium market outlook report Lithium: Outlook to 2028, 16th Edition.