Lithium “shortage” bubble implodes again
wolfstreet.com
wolfstreet.com
I'm not sure why the Shanghai price is being used as the global benchmark without any qualification in this article, because in 2022 China was paying 2x per KG more than the U.S.A. and Europe. Everybody saw a significant increase, but nobody quite like China, where it looks like a bubble.
Prices have come down globally in 2023, but the Chinese price is now much closer to the U.S. and European price.
Regional price index: https://businessanalytiq.com/procurementanalytics/index/lith...
This kind of predatory leeching has to stop, once and for all.
[1] https://www.statista.com/statistics/377025/global-futures-an...
Another related study.[2] Studies agree that the tail is wagging the dog, but there is no agreement on what to do about it.
[1] https://www.nber.org/reporter/2014number2/financialization-c...
[2] https://americanaffairsjournal.org/2019/11/commodity-financi...
Thanks. JFC, that one was mind blowing:
> Last year, production increased to 30.2 billion barrels, but these futures markets alone swelled to 541.6 billion barrels, becoming eighteen times bigger than the global physical output.
So, to put it clear: on average, before reaching a refinery, each barrel of oil that ends up there changed hands eighteen times, with each step extracting wealth (in the form of buy/sell price spread) along the way - for zero gain for both the producers and the consumers of the oil. And yet, everyone seems happy with it.
> but there is no agreement on what to do about it.
If you ask me personally, the answer is easy: burn the entire thing down and restrict the rebuilt one to actually legitimate market participants (producers, wholesalers and consumers of commodities). The current system serves no real purpose other than to enrich a very few people at the expense of everyone else, which is also the reason why this won't ever happen - the financial incentives and thus the amount of money flowing into corruption and its legal friend lobbying is just too much.
The problem is, you won't get that kind of clear-cut answer from any academic studies or even most political parties outside of the far-left (like me) who criticize it on the very real effort this looting has on poor people and the far-right who tends to focus more on the conspiratorial part. It's in the end a question of political ideology and of how independent science, journalism and politics can actually be when faced with billions if not trillions of dollars of financial interests.
There's history here going back to at least 1870 or so.
The farmer position: [2]
The American Enterprise Institute position: [3]
An intermediate position: [4]
[1] https://www.wisfarmer.com/story/news/2021/01/04/snapshot-top...
[2] https://www.wisfarmer.com/story/news/2023/11/13/farmers-are-...
[3] https://www.aei.org/research-products/report/stop-paying-att...
[4] https://www.politifact.com/factchecks/2019/apr/04/elizabeth-...
Yeah, but that's what solid antitrust policies, audits and enforcement are for - at least in theory. Someone has to play police after all, to make sure that everyone can reasonably participate in any truly free market. The problem is that most anti-trust legislation is more aimed at large, nation-scale corporations and even there, enforcement is lacking, but small, regional monopolies/monopsonies or other threats to a free marked are a complete Darwinist world.
In smaller markets stock trading can turn into a manipulation game completely unrelated to the underlying asset.
> Authority stated that it was the perishable nature of onions which made them vulnerable to price swings.
I'm just an interested bystander in terms of futures trading and the article relates to some studies which seem to find that even in the very decade of that incident, onion price volatility was decreased. So is there any strong evidence supporting that any small futures market can be gamed?
Most commodity futures are not legitimate trade; i.e. most parties that will never actually possess the commodity.
They're speculation.
> That's anti-freedom.
No, that idea is not anti-freedom.
People have, from time to time, experimented with banning speculation in commodities like onions in the US. And the wholesale prices of onions are much more volatile than other vegetables as a result. Sometimes commodity traders cause wild price swings and usually lose tons of money with stupid speculation, but more often they act to smooth things out.
Simultaneously you have demand and supply pressures especially if demand is increasing and supply cannot keep up, pressures due to limited transportation and shipping capacity which was a huge issue over the past couple of years across the board (and probably a bigger driver of inflation than nearly anything other than energy prices), and other costs increasing such as energy prices.
China procures most of their lithium through trade, so they're tapping the same global markets as everybody else.
For example if there was not enough shipping routes to China from where it's made then that could be an issue. Or if their demand was up, and there wasn't enough unloading capacity for lithium (not sure how this is being shipped over there) then there can be price spikes.
They manufacture basically everything and export a ton
The high lithium prices in China were the Chinese side of the trade restrictions causing economic pain.
https://about.bnef.com/blog/lithium-ion-battery-pack-prices-...
The single component price, even of the component namesake of the battery, does not cause huge fluctuations in the overall cost of the battery due to the small amount of lithium cost in the battery and the substitution possibilities for all the other components.
And there's even a chance that sodium substitution for lithium could be used in a ton of applications soon.
Batteries and renewables are not like oil: a single commodity price fluctuation is not going to disrupt entire economies. They are a much more stable foundation upon which to build an economy.
But what we're now seeing is the vastly larger availability and price elastic supply of solar and wind power. All this stuff, solar, wind, batteries are getting cheap and commodified. The result is the world economy isn't energy constrained for the first time in 50 years.
Also, between 2020 and 2023 we have a ~20% inflation, and the price is not yet stable.
There have been massive investments in lithium mining over the past few years, especially in Western countries, partly for business and partly for strategic geopolitical reasons. So there's nothing rational about that assumption and I don't think any serious investor made it either because all this is public knowledge among insiders and easily researched. The price spikes are simply based on demand and speculation. Short term there was/is a serious shortage and that's reflected in the price. Also once production of EVs really ramps up, this could repeat. There's definitely no sign of overinvestment in terms of mining and processing.
I took my downvotes for saying that if the demand increased, either the supply will also increase or an alternative will be discovered/developed. And now I'm taking my downvotes for remembering that there was no feeling of bubble (although hindsight is always 20/20), but that the price spike was based on very rational (?) analysis.
Moral of the story: markets are dynamic.
Interesting. But the club of Rome predicted in the 70ies problems for the first half of the 21st century. And I think they are going to win the bet. Two blogs I can recommend:
1. https://senecaeffect.substack.com/
2. https://ourfiniteworld.com/
Both bloggers I consider extremely smart.
Did she ever go back and explain why she was so wrong the first time around with predictions like these?
https://ourfiniteworld.com/2007/07/16/what-is-peak-oil/
https://ourfiniteworld.com/2007/07/16/is-this-a-false-alarm/
https://ourfiniteworld.com/2007/08/06/peak-oil-whats-ahead/
Did she make more cautious predictions going forward, after making such badly failed predictions 16 years ago? If she did, I didn't see it. It looks like Our Finite World is still a drumbeat of predictions about crises just ahead. If she's eventually correct about a specific prediction it will be a case of the stopped clock showing the correct time by chance.
Brexit, not so much despite the sound and fury.
Another one off that helped me get up to speed with understanding lithium was a guest lecture recently streamed at CWU on Exploring the Origin of Economic Lithium Deposits by PhD Rachel Hampton
https://www.youtube.com/live/inq_ypJeiZk?si=LTQFGR07d-ypiS6_
Also there’s a lawsuit ongoing here with Native Americans suing to stop any mining. I suspect that there’s going to be a lot of pressure to not start a mine because of how destructive they are to the environment. At the same time, I’m pretty sure the mine will happen. However, at that point you want to have the highest price of lithium possible and this is a substantial amount of lithium that would be coming on the market which would counteract any price growth.
Exactly my point. All other extraction industries in America are grandfathered in from before NEPA, before anyone gave a damn that a dead guy from the far past thought the stones were holy. America is paralyzed by its own legal system which can be wielded as a weapon by any bad-faith actor who doesn't want electrification to happen.
I’m not aware of any serious challenge to the construction of this mine.
Sure, there may be governmental red tape (eg environmental assessment impact studies and whatnot) but most “no build” laws I believe would be at the state not federal level. Federal environmental legislation itself tends to be quite conservative. There’s an argument to be made the administrative state sets up additional regulations but in this specific case I believe the Trump administration was in favor and the Biden administration never changed course so I suspect the EPA doesn’t have any major objections (not sure if it really passes regulations or if there’s just selective enforcement in favor of the mine)
[1] https://www.nevadacurrent.com/2023/12/07/nv-tribes-will-not-...
Your argument would be stronger about the Maine mine but this mine was approved in 2021 and afaik production is ongoing.
The mining is being done by the Chinese as Lithium Americas’ majority owner is a Chinese company. GM has already invested 650M to get access to the mine. This does not seem like the right hill to argue about bureaucratic lethargy. And again, I don’t see how any of this has any relevance as to whether America has the capability to build and run a lithium mine - we do. We may not have refining capabilities (not sure - haven’t researched) but that’ll come online once we have significant mining operations.
At the end of the day, you don’t want to mine too aggressively because you’ll shoot yourself in the foot economically. The US has some of the largest lithium reserves in the world. This mine alone would represent 25% of the world’s current production capacity. Ignoring environmental damage from mining (which is quite considerable), if you bring it online too quickly you’ll lose out on a lot of money which is probably a larger factor than anything else.
Making a new house used to actually cost less than buying an existing one. Today, the calculation has changed, and it is more expensive, mostly because of the labor costs. They're only able to build in areas where there are fewer available jobs so there's no price pressure.
Literally people leaving the skilled trades because job pricing pressure to work somewhere else. I've even met jr developers that used to be electricians. It's going to be hard to "remember" the trades.
Permits are taking 5 years in esoteric oddball projects. The reality is a permit for a SFH takes a few months to get approved, even less for ADUs.
The driving force behind high construction prices is soft costs and contractor profits. Labor costs in construction have been roughly inline with overall labor inflation across all industries. See https://twitter.com/FactChecker23/status/1730738575292113347...
Also, I think the state has taken some positive action against NIMBY legislation but it will be a long fight to undo it. If things keep going SF is likely to run afoul of the build-positive regulations and end up suing the state/developers to fight needing to be in compliance. But again don’t see the relevance of California housing which is a municipal / state level issue to mining in Nevada on federal lands.
https://www.agc.org/sites/default/files/Files/Communications...
Wow you're waaaay off. As someone in this industry I am acutely aware of how way off base you are.
Look at answers 4 - 10, the rest of it backs this up too.
I just got a recent permit done in 5 months - plan, submit, approval (submit->approval was 3). ADUs in CA are mandated at 60 days max for approval
Also, outside of CA approvals in some jurisdictions are weeks: https://www.reddit.com/r/Homebuilding/comments/sk3bd2/how_lo...
There's an argument to be made that the tradeoffs are worth it in this case, but you don't seem to be making an argument so much as completely dismissing groups of locals and environmentalists who have a number of valid concerns.
It could make sense in some very specific situations, but that really depends on the details.
I agree it will have limits, I doubt I'll see long flights like 200 miles. But I see no reason it can't improve by 10% a year just like the batteries. I believe the ones in service are using lfp batteries, which are safer than lithium batteries, but also have lower energy density - and these have gone up over time too in energy density.
It does unfortunately mean that you need to excavate a lot to mine it which is not great for the environment either (even though lithium is currently key to most renewable technologies)
The lithium mine in question is 0.22%, doesn't seem like your range is that typical.
There is a (super nutty) environmentalist group and some Native Americans protesting and trying to delay the mine, but it looks like they have so far been unsuccessful at convincing judges, and blockers have been getting cleared out.
I consider myself an environmentalist, so I'm a bit sensitive about descriptions like "nutty environmentalist", but... the group protesting the Thacker Pass mine is weird and I think largely repudiated by other environmentalists. I mean, they're trying to stop the transition to clean energy. These guys advocate for total deindustrialization, return to a pre-agriculture way of life, only as many humans as the hunter-and-gatherer lifestyle can support, and they're... deeply anti-trans?
They should start reducing the population with themselves, obviously
If the price is swinging up and down constantly and there is no well established price, then that is yet another situation which seems different from the previous two and the title might be better off capturing the unsteady nature of the price.
If I make a major story that "X happened three times this year" without pointing out in the title that the historic numbers of X is 2 to 4 each year, it can be treated as a dishonest implication of some trend that doesn't exist. We know many will only read headlines and will not question the implications. This is something worth calling out even when it is over trivial matters to prevent it from being used for more serious matters.
No it doesn't. Look at any commodity futures prices: they swing wildly for no apparent reason. Fundamentals are only loosely connected to today's prices.
The article is quite clear on what happened, and interesting too. But the headline is clickbaity.
Probably, someone with influence lost money buying at the top and is pushing articles to try to recoup their losses.
It’s always “crashing”, just magically 1,000% higher from the last time you looked!
The prevailing opinion was that lithium would stay expensive or go up even more. The price also has not stabilized and may well continue to drop; this is an in-progress update.
This is all econ 101 level effects, and yet there have been so many articles in the past few years where writers are shocked at what is happening to the prices this week. Or even dumber ones where they project out battery production to 2030 and then compare that to the lithium market today and come to the conclusion that we will never be able to electrify because the lithium market isn't big enough.
I'm personally excited for the point a few years from now when all of the battery plants are online and they overshoot demand and the prices crater. It will be a short but glorious golden age for grid storage, EV startups, and so on until some of the companies go under and others consolidate and the prices come back up to a more sustainable level.
https://elements.visualcapitalist.com/breaking-down-the-cost...
https://thundersaidenergy.com/downloads/lithium-ion-batterie...
Of note: raw materials are now ~2/3 of the total price of a battery cell, because of the continued plunge in manufacturing costs. And it's pretty well distributed across the different raw materials used. That indicates that the price may not drop all that much more without a concerted supply-chain effort.
And then there is the reality that most EVs are still being designed and marketed as upmarket luxury cars, and not with the goal of maximizing mass adoption of EVs in the near term.
The market for EVs is the market for higher end new vehicles today. Therefore even as battery prices drop, other factors will probably keep the prices pretty high in the near future.
1. https://cleantechnica.com/2023/12/01/record-low-ev-battery-p....
Hopefully we are not far from the tipping point cheap batteries are needed for it to happen though where world yearly electricity consumption growth can be met by renewables alone and we can start closing more and more coal power plants.
https://camelcamelcamel.com/product/B01C4PP8FK?cpf=amazon-ne...
My Nest smoke detectors demand these specific batteries. They were all installed around the same time, so they all come due at once, at a cost of ~$200.
I'm not sure what the actual scale of difference is between battery chemistries. Perhaps someone with more knowledge will reply and refute me.
Until recently at least, Energizer was the sole supplier of these batteries. You can't use anything else because they have a different voltage and discharge curve, so if you put alkaline batteries in, the Nest will almost immediately complain that they're low. I see there are some mildly sketchy other brands on Amazon now. Not sure if I'm going to take that chance.
Nest smoke detectors take 6 batteries each https://support.google.com/googlenest/answer/9297548?hl=en#:....
72 batteries / 6 batteries/device = approximately 12 smoke detectors (could be 9, 10, or 11)
We have 6 First Alert smoke detectors that are connected together but don't use WiFi. There's 1 in each bedroom and a couple left over for key places.
Using 12 smoke detectors is being very careful to cover every space or a big house. Or both.
I don't have a huge house, but it is a 1950s split-level, and is pretty much the opposite of a modern open-plan design. And yes, I'm careful. Following NFPA recommendations, I have a smoke/CO detector in every bedroom, outside every sleeping area, and on every level, which adds up. Better safe than sorry.
But the argument, 'there really isnt much lithium in a battery, there's loads of lithium, albeit maybe not in good forms(pure lithium go boom).' and so the investment was a poor idea.
That's all this is, people think 'omg lithium ion batteries are the future' lets try to corner the market and then they fail. There will never be a lithium shortage.It's not common like iron or carbon. It's about as common as silicon or chlorine. More common then copper, zinc, nickel.
It looks like it's returning to its pre-pandemic levels. Demand is increasing with EV's so it's still interesting, but possibly less interesting than the title implies.
Usually if he’s talking about history so if he meant some long term based on analysis, I would expect him to call it out.
Market based then, and time scales do matter, as we see now with the issue to entire generations in finding affordable housing.
The problem with a market based approach is that when things genuinely do become limited, people substitute or do without. And thus market watchers like Taleb don't notice that something that busted is now fully bust (or has become a luxury item).
https://www.visualcapitalist.com/visualizing-25-years-of-lit... has a per-country visualization of it; look like Australia has a big share of the increase.
I somewhat expected USD but i'm not surprised. Times change.
Since those refining costs are in domestic CNY, it makes perfect sense that the commodities price will also be quoted in CNY.
Nothing to do with "times changing", everything to do with country of production. (Most commodities aren't so tied to a single country, which is why they end up in USD.)
https://en.wikipedia.org/wiki/Environmental_impacts_of_lithi...
https://www.pcienergysolutions.com/2022/04/27/how-quickly-ca...
https://www.iea.org/energy-system/electricity/grid-scale-sto...
https://insideevs.com/news/692788/tesla-battery-energy-stora...
(edit: as the cost of renewables approaches sub $0.01/kwh wholesale, storage/transmission/distribution become the primary costs of energy)
But in all seriousness, it depends on the chemistry.
Li-ion? - No way I'm building my own!
LiFePO4 - can come in nice prismatic cells that are easy to connect terminals with bars (just remember to keep them under compression!). Their failure mode is MUCH nicer than Li-ion.
LTO - these are really interesting to me, and I am really tempted to branch out into this area. They look great from a safety perspective.
Disclaimer: I have installed ~15 kWh of DIY batteries for solar.
It is pretty trivial if you are prepared.
What you find trivial might be too much of an ask for someone else. Because you think it is trivial and demonstrate that you clearly feel it is something you can blindly recommend to someone else on the internet is dangerous arrogance. Sometimes, it is perfectly reasonable for the response to a question to be another question.
Personally I would consider building one myself, but there's no way I'd keep it in my house (it would be going in a fireproof metal shed at the bottom of the garden or similar). And tbh, that's probably more trouble (and expense) than just buying a commercial one.
Lithium iron prismatic cells are quite neat if you want to make your own packs. Electric gocart suppliers might sell you cells and bms.
It was really hard to get anyone to sell you cells, like 8 years ago when, I did 4 6kWh packs. It might be easier now.
It's going to be really hard to undercut oil by dropping lithium prices, as nickel is a bigger contributor to cost.
It's not yet mass-produced at scale or commodified to have much impact yet. The falling lithium price however could make sodium batteries less attractive.
Now that I think about it, maybe it would be possible to make Lithium from a heavier element -- such as Beryllium (the next element in Lithium's period/horizontal row) and/or Sodium (the next element in Lithium's group/family/vertical row -- that is, an element whose properties are the most similar to Lithium).
But, the point is, if scientists or future scientists can do that -- then we can end this Lithium debate once and for all!
Oh sure, it may initially cost, like, trillions of dollars to do this in the lab the first couple of times (the history of using particle accelerators to transmute metals is a case study in cost ineffectiveness -- but then, so is the history of early mainframe computers, and so is the history of using rockets to send satellites to orbit) but eventually with continued experimentation, the cost should become cheaper and cheaper...
First you make it work -- then you make it cheap.
You know, the Elon Musk school of business philosophy...
First you make it work -- then you make it cheap... or at least cheaper...
Which was actually, coincidentally, Henry Ford's philosophy -- and that of the early American capitalists (AKA, "The Robber Barons" -- as well)...
Also, I'd put that simple philosophy against anything that anyone could learn in a Harvard, Stanford or Wharton MBA program (*) for $73,440 and one or two years of their life, plus living expenses!
First you make it work -- then you make it cheap...
> cheaper
Physics sets fundamental limitations on how much energy you need, which means your lower bound is set by energy prices.
It's not that scarce, it's not something like Polonium.
I would love to see Lithium produced cheaply and efficiently from seawater as much as the next guy -- but tell me, is this a practical reality today?
?
If there's a working Lithium-from-seawater extraction facility fully operating and producing Lithium at scale as of the current date -- then I have yet to see it.
Would you kindly provide a link or links to web pages describing such a facility?
Also, if seawater Lithium extraction is a present-day reality, then why do Lithium mines and mining operations continue to exist?
I don't deny that Lithium could possibly be pulled out of seawater or any other Lithium containing substance for that matter -- but as of the present date, I haven't seen seawater Lithium extraction (like, from the actual Ocean) working and working at scale...
So...
Links please?
But, all of this being said, Lithium extraction from seawater is indeed a great idea(!) -- if it could work and work at scale (and it quite possibly could, in the future!)
The bench process is https://electrek.co/2021/06/04/scientists-have-cost-effectiv...
>> First you make it work -- then you make it cheap.
^ We are at step 1.
Some nuclear fusion people are proposing using lithium as an input. Guess where they're saying they'll get it from. https://news.newenergytimes.net/2022/01/08/lithium-lithium-e...
Most ideas which have advanced humanity in some way -- have historically been perceived as "bonkers" -- at the point in time of their inception.
>"...before moving the goalposts all the way to "If there's a working Lithium-from-seawater extraction facility fully operating and producing Lithium at scale as of the current date -- then I have yet to see it." "
Well, "goalposts" moved or not -- I still do have yet to see it... (didn't your initial reply change the original "nuclear chemistry" goalpost to the "fishing it out of seawater" goalpost?)
That having been said, the links you have provided are very interesting and informative (thank you for them!) -- and perhaps lithium extraction from seawater at scale -- will one day become a practical reality!