Lithium Market Update: Q2 2021 in Review

What happened to lithium in Q2 2021? Our lithium market update outlines key developments and explores what could happen moving forward.

Click here to read the latest lithium market update.

The first six months of the year have been bright for the lithium market.

Despite the volatility the coronavirus pandemic brought to every market, lithium has shown resilience and prices performed on an uptrend during the first half of 2021.

Interest in battery metals continues to increase as electric vehicles (EVs) take over news headlines around the world, which has been beneficial for lithium.

How exactly did the metal perform in the second quarter of 2021, and what’s ahead for lithium in the near term? Read on for an overview of the main news that impacted the lithium market in Q2, plus a look at what investors should watch out for the rest of the year.

Lithium market update: Price performance

Lithium prices increased at an unexpected speed during the first three months of the year on the back of strong demand from the EV market.

Following a positive start to the year, lithium prices continued this trend in the second quarter.

“Lithium chemical and feedstock prices continued to perform well in Q2, following tightening supply/demand fundamentals, which pushed the market into a rising price environment during Q1 2021,” George Miller of Benchmark Mineral Intelligence told the Investing News Network (INN).

The Benchmark Global Weighted Carbonate Price rose by 15.6 percent across the quarter, and its equivalent Benchmark Global Weighted Hydroxide Price rose by 34.5 percent, while spodumene prices rose by 11.1 percent (FOB Australia).

Speaking with INN about the lithium market in the second quarter, James Jeary of CRU Group said spot prices were largely steady in China. “Q2 is typically slightly weaker for EV sales, which weighs on demand, although May sales were stronger than previously expected,” he added.

News from top producers is pointing to demand growth, with Chile’s SQM (NYSE:SQM) reporting a 180 percent jump in lithium sales volume in the first quarter.

As a result, the miner is looking to fast-track existing expansion plans in Chile’s lithium-rich Atacama salt flat. SQM’s new target is to reach 180,000 metric tons of lithium carbonate and 30,000 metric tons of lithium hydroxide in Chile by the end of 2022.

Rival Albemarle (NYSE:ALB) also posted positive Q1 results, saying it’s in the final stages of two projects that will boost its lithium processing; it expects to approve further expansion projects in Q2.

Argentina-focused Livent (NYSE:LTHM) exceeded profit expectations in Q1 due to rising lithium sales. Longer term, Livent’s plan is still to triple its carbonate capacity in Argentina to roughly 60,000 metric tons and to expand its hydroxide capacity in multiple geographies to meet growing customer demand.

Meanwhile, China’s Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460) had plenty of news throughout the quarter, acquiring a stake in a lithium mine in Mali for US$130 million and receiving approval to build a 20,000 tonne per year lithium plant for its Mariana project in Northern Argentina. The company is also set to buy Millennial Lithium (TSXV:ML,OTCQX:MLNLF) for US$353 million.

Lithium market update: Supply and demand

Demand is set to continue to rise for lithium products in the next quarter, following the trend seen so far in 2021. “EV sales across all jurisdictions have been improving, and cell manufacturers and cathode manufacturers alike have been scaling production efforts and expansion plans in order to cope with forecasted demand growth,” Miller said to INN.

Demand trends are strong for both carbonate and hydroxide, he added, given the popularity of lithium-ironphosphate cathode material in China for shorter-range, durable, lower-cost EVs.

“(This) coexists with demand for higher-nickel cathode types in all end markets, which can provide longer-range travel and higher energy density for consumers with range anxiety,” he added.

Jeary agreed, saying strength in demand will remain in H2. “China will continue to be strong, and we expect good sales in US and Europe, although year-on-year the latter’s growth may not be as strong because of the effect that subsidies being introduced had in 2020 H2,” he said.

The CRU analyst added that currently demand for hydroxide seems to be stronger than carbonate in China due to production of high-nickel cathode chemistries.

In terms of supply, Benchmark Mineral Intelligence’s outlook has been revised upwards slightly, reflecting the increasing ramp-up rate for both brine and hard-rock sources.

“Despite this, the increase is unlikely to meet rising demand, placing both chemicals in a very tight position by the end of this year,” Miller said.

Similarly, CRU’s supply forecast has increased slightly due to a strong Q1 (and assumed strong Q2) for spodumene miners in Australia. “Production guidance has increased for some mines, which will see output remain strong in H2,” Jeary said.

Partnerships continue to take place in the lithium space, with Orocobre (ASX:ORE,OTC Pink:OROCF) and Galaxy Resources (ASX:GXY,OTC Pink:GALXF) joining forces in what Miller described as an “extremely significant” partnership.

“The new joint producer is set to become the sixth biggest in the world in terms of production volume, alongside controlling a formidable range of assets both in development and greenfield,” Miller said.

In terms of expansions, for the expert some of the biggest plans have stemmed from Ganfeng Lithium, which appears to be aiming to retain its stronghold as one of the largest chemical converters within China, with a focus on upstream acquisition to secure feedstock supply.

“We have definitely seen an increasing frequency of investment announcements since the beginning of 2021,” Miller said. “What has been especially interesting is increasing involvement in the lithium value chain from downstream automotive OEMs as they confront a looming deficit in raw material supply.”

He pointed to General Motors’ (NYSE:GM) announcement that it will invest in Controlled Thermal Resources, a lithium developer intending to generate supply from the Salton Sea in California.

“We anticipate more of these announcements as automotive OEMs work to secure critical minerals supply for their cell supply chains in the future,” he said.

Commenting on the main hurdles lithium miners face today, Miller said the biggest challenge — and opportunity — for producers will be meeting customer demand and in turn maintaining market share.

“Lithium developers will have to take risks to scale to meet forthcoming demand from the battery market, whether that includes investing in new assets, new production methods or making acquisitions in order to scale quickly enough,” he added.

For Jeary, despite the demand prospects, supply-side discipline will remain important for lithium miners. “Expansions, restarts and greenfield supply growth must come online in a timely manner to prevent a return to oversupply,” he said.

For lithium developers and explorers, the analyst said it can be hard to get established in a market dominated by large incumbent producers that are looking to consolidate market share.

“Mergers and acquisitions by majors could be an opportunity for juniors to get a better foothold in the market,” he said.

Lithium market update: What’s ahead for prices and key catalysts to watch

Given strong demand-side dynamics, and little supply-side expansion to compensate, Benchmark Mineral Intelligence forecasts that the market is likely to see higher prices in Q3, and ultimately H2 2021.

“Now that hydroxide has regained a price premium to carbonate within China, we anticipate this to remain the case for some time, especially given the strong NCM/NCA cell production outlook as we start to see more uptake of high-nickel cathode chemistries in the industry,” Miller said.

For CRU, contract prices will continue to move higher, reflecting spot price gains from earlier in the year. “We expect spot hydroxide prices to remain at a premium to carbonate in Q3 due to strong demand and tighter spot supply,” Jeary said.

Speaking about factors for investors to keep in mind in the next few months, Miller said meeting development targets, expanding production and investing in new assets are key factors to watch for any lithium player. “These factors will ultimately determine the lithium incumbents of the future,” he added.

For Jeary, government subsidies and OEM pledges will be important in determining EV uptake. “Any announcements related to mine expansions or restarts will also be important for determining supply over the next few years.”

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Catch up and get informed with this week's content highlights from Charlotte McLeod, our editorial director.

Top Stories This Week: Powell Gets Fed Nomination, Using Gold in a Market Correction youtu.be

We're back after a break last week with quite a bit to cover in the gold space.

After running up past the US$1,860 per ounce mark midway through November, the yellow metal has taken a tumble. At the time of this writing on Friday (November 26) afternoon, it was sitting just under US$1,790.

Gold's losses this week have been attributed to elements like a stronger US dollar and better Treasury yields, although Jerome Powell's US Federal Reserve chair renomination has pulled other factors into play — some market watchers believe he may move to taper and raise interest rates faster than anticipated.


If the Fed follows its previously laid out timeline for tapering, it will wrap up in mid-2022; the central bank has said it won't raise rates until after that. It has also emphasized that its roadmap may change if necessary.

Looking at the larger picture for gold, I heard recently from Nick Barisheff of BMG Group, who believes the stock market is due for a major correction.

"The market is due for a major correction. What will cause it and when it will happen is anybody's guess — it could be tomorrow, it could be six months from now" — Nick Barisheff, BMG Group

It's impossible to know when this correction will happen, but Nick emphasized the importance of acting before it's too late. He pointed out that investors are typically slow to get out of the market once a crash actually begins — they wait for a turnaround, and by the time it's clear there won't be one, they've experienced big losses.

In his opinion, the solution is to get out of the stock market early and transfer money into gold.

Here's how Nick explained it:

"Instead of taking your money off the table and going into cash … you go to gold (because cash is devaluing daily). Gold will at least hold its own and probably appreciate … so by sitting it out in gold you can wait until the market finishes correcting and then buy back in" — Nick Barisheff, BMG Group

With gold's future in mind, we asked our Twitter followers this week what price they think the metal will be at the end of 2021. By the time the poll closed, most respondents had voted for the US$1,800 to US$1,900 range.

We'll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Finally, in the cannabis space, INN's Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares to get his thoughts on 2021 trends and what's ahead in 2022.

Dan was candid, and said if he had to choose one word to describe the cannabis market in 2021, it would be "painful." Like many others, he's been disappointed in the industry's performance — while positivity initially ran high due to excitement about potential federal changes in the US, ultimately progress has been slow.

"Cannabis started with a big run-up in January and February ... and things dragged from there" — Dan Ahrens, AdvisorShares

Still, Dan has hope for 2022 and said it will be a "huge year" for cannabis. He believes US reforms will come sooner rather than later, and in his opinion those widely anticipated changes will bring a wave of M&A activity.

Specifically, he expects to see alcohol, tobacco and other consumer packaged goods companies making deals with cannabis players, not just cannabis entities doing transactions with each other.

"Those big alcohol companies, tobacco companies, other consumer packaged goods product companies — they're waiting. They're waiting on the US" — Dan Ahrens, AdvisorShares

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there's someone you'd like to see us interview, please send an email to cmcleod@investingnews.com.

And don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

cannabis plant layered with German flag graphic
Dmytro Tyshchenko / Shutterstock

Catch up on some of the biggest news of the week for the cannabis investment world.

Three political parties have formed a coalition in Germany, leading to a new government, and it has promised cannabis reform in the European nation.

Meanwhile, a popular cannabis retailer confirmed consumers will now find its products available for delivery on the Uber Eats mobile application in Ontario.

Keep reading to find out more cannabis highlights from the past five days.


Coalition of parties promises forward-looking cannabis policy

Germany, a country with comprehensive and elaborate medicinal rules for cannabis, is in a time of transition as a new government is set to begin to take over after 16 years of Angela Merkel.

Olaf Scholz, the proposed next chancellor of Germany, leads a three party coalition that will become the country's governing body. As part of its promises, talk of adult-use cannabis regulation has now gained even more momentum. A report from MJBizDaily quotes a German policy document that shows the coalition's stance:

"We are introducing the controlled distribution of cannabis to adults for consumption purposes in licensed shops. This controls the quality, prevents the transfer of contaminated substances and guarantees the protection of minors."

However, despite the promise and excitement, it remains to be seen how these ideas will be applied since no formal regulations have been drafted or approved yet.

Canadian cannabis retailer partners with popular delivery app

Tokyo Smoke, a cannabis retail operator in Canada owned by Canopy Growth (NASDAQ:CGC,TSX:WEED), announced a collaboration agreement with Uber Canada (NYSE:UBER) whereby cannabis consumers will be able to use the Uber Eats app to order products before they visit stores.

While the app won't let consumers get cannabis delivered to them, this new method opens the doors to more dynamic ways of buying cannabis.

"As a market leader in innovation and a platform used by so many Canadians, we believe this is the ideal next offering that can be done safely and conveniently on the Uber Eats app," Mark Hillard, vice president of operations with Tokyo Smoke, said in a press release.

A report from the Canadian Press indicates Ontario is considering allowing dispensaries to have delivery and pickup options made available to consumers permanently. The province allowed some of these purchasing options at the outset of the COVID-19 pandemic, but then removed them.

Lola Kassim, general manager of Uber Eats Canada, said this new end-to-end experience will provide consumers with responsible access to legal cannabis products.

Cannabis company news

  • Organigram Holdings (NASDAQ:OGI,TSX:OGI) issued financial results for its Q4 2021 period. In its report, the company notes a net loss of C$26 million despite a 22 percent uptick in net revenue to C$24.9 million. Beena Goldenberg, the newly appointed CEO of the firm, is encouraged by the market share position earned by the company, which said it became the fourth biggest producer in Canada during the reporting period.
  • Halo Collective (NEO:HALO,OTCQB:HCANF) confirmed the decision for Akanda, its spinoff company focused on international cannabis opportunities, to begin trading on a US exchange. "The number of shares to be offered and the price range for the proposed offering have not yet been determined," the company told investors in a press release.
  • High Tide (NASDAQ:HITI,TSXV:HITI) announced the acquisition of 80 percent of NuLeaf Naturals, a CBD product wellness developer, for an estimated US$31.24 million. The deal includes a three year option clause for High Tide to complete a total acquisition. "As international markets open up and as export regulations evolve, NuLeaf's cGMP-certified facility positions us to take advantage of the global CBD business opportunity," Raj Grover, president and CEO of High Tide, said.
  • Humble & Fume (CSE:HMBL,OTC Pink:HUMBF) released the financial report for its first 2022 fiscal quarter to shareholders and the market. "As the legal cannabis market in North America continues to mature, Humble remains agile and focused on providing a leading solution for brands to scale quickly and retailers to focus on their customers," Joel Toguri, CEO of Humble, said.

Don't forget to follow us @INN_Cannabis for real-time updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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