UBS Lowers Lithium Price Forecast Amid Weak EV Demand
UBS analysts revised their lithium price outlook on Monday, citing weaker-than-expected electric vehicle (EV) demand. The analysis of auto production, EV sales, and battery demand led to a 10% reduction in automotive battery demand forecast through 2030. This shift has implications for lithium producers and related equities, resulting in lower price targets for key companies.
The decline in demand is attributed to a slowdown in global EV sales growth, especially in major markets like China, the European Union, and the United States. The rise of plug-in hybrid electric vehicles (PHEVs) using smaller batteries is also contributing to the reduced forecast.
Despite some lithium supply projects being deferred, the decrease in supply is not enough to counter the weakening demand. This imbalance is reflected in the downgraded lithium price forecasts.
Looking ahead, UBS predicts a surplus in supply until at least 2027, with the future market dynamics dependent on African primary lithium supply and Chinese primary and conversion supply.
The downgrades in price forecasts have significant repercussions for lithium producers, with key players like Pilbara Minerals and Mineral Resources facing reduced price targets. UBS maintains a “buy” rating on Patriot Battery Metals, citing potential in their Corvette project in Canada.
In conclusion, the current trend of weaker EV demand has led to a shift in lithium price forecasts, impacting key players in the market. Understanding these dynamics is crucial for investors looking to navigate the evolving landscape of the lithium industry.