Lithium carbonate prices have jumped 25% this year, reaching an 18-month high of US$13,292 per tonne.
The uptrend in lithium prices began in June as the demand surged for battery infrastructure and electric vehicles (EVs).
Leading lithium producer Ganfeng anticipates a 30% increase in lithium demand in the coming year.
Meanwhile, China is introducing supportive policies for the EV industry, which are likely to further boost lithium demand.
Trading Economics analysts noted:
China, the world's largest lithium consumer, announced plans to double its EV charging capacity to 180 gigawatts by 2027, which will support lithium-rich energy storage systems with additional compensation mechanisms for power storage infrastructure.
New energy vehicle production in China has increased by 33.1% in the first ten months of the year, with October sales making up 51.6% of the market share—the highest on record for new energy vehicles.
Other lithium prices are also surging.
The Spodumene Concentrate Index (CIF China) Price has climbed 26% in just one month to US$1,162 per tonne.
Meanwhile, the price for Battery-Grade Lithium Hydroxide has increased by about 9.5% in a month to US$10,300.32 per tonne.
China is additionally taking measures to limit the production of key minerals like lithium, aiming to maintain current price levels.
Broker Recommendations on ASX Lithium Shares
The surge in lithium prices has propelled ASX lithium shares to new 52-week highs.
Currently, Pilbara Minerals Ltd (ASX: PLS) shares are trading at $3.82, reflecting a 2.3% increase from Friday and an impressive 184% rise since July 1.
The company's share price hit a 52-week high of $4.26 last month.
Last month, Citi reiterated its hold rating on Pilbara Minerals with a 12-month price target of $3.25.
Morgans rates the shares as a sell with a price target range between $2.80 and $3.10.
IGO Ltd (ASX: IGO) shares are now at $6.91, up 7% on Friday and 66% higher since July 1.
The nickel and lithium producer reached a 52-week high of $7.35 last month.
Macquarie recently placed a buy rating on IGO shares, setting the price target at $5.75.
Citi maintains a hold rating with a price target of $5.60.
Morgan Stanley has a sell rating on IGO shares, targeting a price range of $4.50 to $4.60.
The share price of Liontown Ltd (ASX: LTR) is at $1.33, showing a 5.6% increase today and up 90% since July 1.
Liontown shares hit a 52-week high of $1.61 last month.
Last week, Macquarie rated Liontown as a sell with a price target of 65 cents.
Citi also rated the shares as a sell, with a target of 50 cents.
Outlook for Lithium Prices
Jacob White from Sprott Asset Management stated that sentiment around lithium turned positive this year after three years of decline.
He highlighted the expectation of stronger demand outside the US, which may absorb the global oversupply sooner than anticipated.
In a recent article, White said:
This resurgence is driven by robust demand growth and ongoing inventory reductions, in addition to stringent regulations, such as the closure of a major Chinese lithium mine by Contemporary Amperex Technology Co. Ltd. (CATL) and government measures preventing producers from selling lithium at unsustainably low prices.
The recognition of lithium as a critical mineral, combined with concerns in the West over China’s control of global supply chains, is supporting the sector outside of China.
These factors are reshaping the global lithium market and supporting higher prices.
White indicated that Sprott Investment is optimistic about lithium prices.
With supply adjustments taking effect and global EV demand staying relatively strong, our outlook for lithium remains favorable.
We believe that price stabilization, industry consolidation, and continual government support in China will bolster long-term growth prospects, despite uncertainties caused by shifting U.S. policies.
White also pointed out that lithium batteries are increasingly used in data centers powering the AI revolution.
He commented:
The electricity demand of global data centers is projected to increase 2.5 times by 2030, indicating considerable growth potential.
Google, for example, uses over 100 million lithium-ion cells in its data centers worldwide.
