Along the same lines and from:  

Three Commodities Set To Boom As The Global Economy Recovers

By Alex Kimani - Mar 17, 2021, 5:00 PM CDT

#3. Lithium

Lithium bulls are enjoying their best moment in decades, lithium prices already up 88% YTD thanks to robust demand for cobalt and nickel free EV batteries.

Bullish tech markets are rarely without curious dislocations. And right now one of the biggest imbalances can be seen in the huge momentum behind EV stocks such as Tesla Inc. (NASDAQ:TSLA) and the lithium market, which has remained in bear territory for years now. 

Over the past couple of years, a cross-section of analysts including Goldman Sachs have tried calling a bottom on lithium prices, reckoning on a significant contraction in supply as persistently low prices limited production of one of the key commodities in the EV powertrain. That has not happened--until now.

Lithium’s moment to shine appears to have finally arrived, thanks to the massive electrification drive and robust demand for electric vehicles.

Specifically, lithium prices have been on a tear thanks to explosive demand for lithium iron phosphate (LFP) batteries according to Benchmark Mineral Intelligence (BMI).

BMI says battery grade lithium carbonate midpoint price (EXW China, ≥99.0% Li2CO3) for mid-March was a good 88% higher since the start of the year to over $12,600 a tonne, the highest level since March 2019.

Lithium hydroxide prices are up 20% over the timeframe, although a relatively deep discount to carbonate continues to exist. 

Cobalt and nickel free vehicles are proving to be a runaway success.

According to BMI analyst George Miller, “...demand for durable, improved, and low-cost LFP cathode material has become rejuvenated in China – a very similar story to what we saw in lithium’s last price run of 2016 but with a much improved product for the 2020s.”

A year ago, Tesla Inc. (NASDAQ:TSLA) surprised the electric car industry when it announced some Model 3s made in its Shanghai factory will be equipped with lithium iron phosphate (LFP) batteries.

In December, only its second full month of sales, Tesla Model 3 55KWh LFP-battery captured 5.9% of the global full electric car market in terms of battery capacity deployed despite not being for sale in the US. Strong demand in Europe saw LFP-powered Model 3s command 46% of all Model 3 sales in January.

The Democratic Republic of Congo (DRC) is home to over half of the global cobalt reserves and provides over 70% of the total cobalt feedstock production globally. Unfortunately, for many years, human rights groups have highlighted severe human rights issues in cobalt mining operations including child labor, leading to buyers shunning supplies from the region. 

By Alex Kimani for Oilprice.com