UBS sees world lithium demand rising in 2025

UBS has up to date its outlook on the lithium market, indicating a shift within the business’s trajectory. The agency famous that the provision of lithium had outpaced demand all through 2024, resulting in a surplus and a lower in costs by roughly 10-30% year-to-date. Nevertheless, a response to the decrease costs has emerged, with provide curtailments and a slowdown within the growth of latest mining initiatives.

Consequently, UBS now anticipates that offer development will fall in need of demand, forecasting a worldwide surplus discount and a market stability by 2027-28.

Regardless of the potential for curtailed manufacturing to renew swiftly, which might restrict any imminent value surges, UBS expressed elevated confidence that the market has moved previous the underside of the cycle.

Reflecting this improved outlook, the agency has raised its near-term value targets for spodumene in 2025 and 2026 by 7% and 17%, respectively, to $800 and $850 per ton.

By way of fairness, UBS maintains a promote ranking on Australian lithium producers Pilbara Minerals Ltd (ASX:PLS), Mineral Assets Restricted (ASX:MIN), and Liontown Assets Restricted (ASX:ASX:LTR). The agency has upgraded Independence Group NL (ASX:IGO) to impartial from its earlier ranking, whereas sustaining a purchase ranking on the longer-dated choice, Pilbara Minerals Restricted (ASX:PMT).

The revised provide forecast for 2025 has been diminished by roughly 18% or 300,000 tons of lithium carbonate equal (LCE), reflecting the impression of price-driven curtailments and undertaking delays. UBS expects world manufacturing development to gradual to fifteen% year-over-year, reaching roughly 1.5 million tons LCE in 2025. This slowdown is especially notable in China, the place manufacturing is projected to say no by 3% year-over-year into 2025, and in Australia, the place regardless of undertaking expansions, low costs proceed to exert stress.

On the demand facet, UBS forecasts world lithium demand to develop by 18% year-over-year to 1.5 million tons LCE in 2025, a strong fee however slower than the over 20% annual development seen in earlier years. The agency highlighted a number of elements influencing demand, together with U.S. insurance policies below a possible second Trump presidency, EU carbon emission targets, commerce tariffs on Chinese language EV imports to the EU, and the rising significance of vitality storage programs (ESS).

UBS’s value outlook for spodumene, a key lithium supply, has been elevated for the approaching years, but the agency stays cautious, suggesting that any value upside is restricted by the potential reactivation of manufacturing that has been curtailed.

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