According to Goldman Sachs, due to the excess supply of lithium, the bull market of lithium is about to reverse and enter a deep adjustment.

Goldman Sachs believes that although the demand for lithium is growing exponentially, it believes that the bull market for this battery metal has ended. However, Goldman Sachs acknowledged that the long-term outlook for the industry remained strong.

Goldman Sachs predicts that the average price of lithium will fall to a level slightly lower than US $54000 per ton this year and slightly higher than US $16000 by 2023, compared with the previous average price of more than US $60000 per ton.

However, not everyone agrees with Goldman Sachs' bearish forecast. There are three reasons behind this:

Goldman Sachs misjudged the fundamentals of lithium

Rodney Hooper, an economist at rk equity, said he strongly opposed the research results of Goldman Sachs analysts on supply and demand.

His biggest view on the Goldman Sachs report is that he obviously does not see enough upstream investment to meet current and future needs.

Daniel Jimenez of Ili markets also confirmed Hooper's statement in an interview, saying that Goldman Sachs analysts overestimated supply and underestimated demand.

According to Goldman Sachs analysts, by 2025, the global demand for lithium carbonate equivalent (LCE) will reach 1.2 million tons, while Albemarle, the top lithium producer, predicts a demand of about 1.5 million tons.

Difficult to predict lithium market

Goldman Sachs is not the first investment bank to be questioned for predicting the price of lithium, because it is difficult to predict the trend of the lithium market.

Analysts at benchmark mineral intelligence said Goldman Sachs could not add up all lithium reserves and then make a judgment of oversupply.

The development of lithium industry cannot rely on only oneortwo Asian countries

Goldman Sachs said that the most "important" supply of new lithium would come from Asia. However, benchmark mineral intelligence refutes this view, pointing out that spodumene and other hard rock resources in some Asian countries are of low quality, and may not be able to produce enough lithium to reach battery quality.

In addition, waste disposal costs and processing costs are high, which make it a marginal source of lithium, so it is unlikely to lead to oversupply.

According to BMI data, at the end of 2021 and 2022, due to the lag effect of significant changes in spot prices, lithium futures prices may continue to rise, while spot prices may decline, and the two prices will be closer to equilibrium than the current situation.

Moore said that structurally, lithium prices may remain high from 2025 to 2026. At least "the current high level means more than $40 per kilogram, which is much higher than the incentive price for the development of marginal cost green space projects." Whether the price is $40, $60, $80 or $120, it is difficult to judge the price.