After about two years of extremely strong demand, especially from the automotive sector, the lithium market may even see an oversupply this year. This was announced by Matti Zhao, director of non-ferrous metals in the Asia-Pacific region. Bank of America (BofA)attributing this to a notable reduction in demand as well as an increase in supply internationally, according to a report by the CNBC news network and moneyreview.gr. Lithium, often referred to as “white gold”, is a key material for batteries in electronic devices and electric vehicles. Zhao told CNBC that supplies from lithium mines have increased significantly. “We expect lithium supplies to grow by 38% this year. Therefore, it is possible that there will be a surplus in lithium in 2023,” she stressed. On the other hand, according to him, in China, the world’s largest market for electrification, there will be a slowdown in demand for electric vehicles from 95% last year to 22% this year.

In 2021, the price of lithium began to rise significantly, while last year it soared due to higher demand for electric vehicle equipment, a “heart attack” in the global supply chain, and rising inflation internationally. In November 2022, its price reached its highest level and was twelve times higher than in January 2021. High prices provided an incentive to increase production and add new supply chains or expand old ones. Partly for this reason, there has been a recent market correction amid falling sales of electric vehicles and low business activity in China. It is noted that in May last year, Goldman Sachs predicted that lithium supply would increase by 33% annually between 2022 and 2026. “We expect China’s expansion plan in the lithium sector to ramp up rapidly,” BofA bank analysts said. They also predicted that “accelerated sales of electric vehicles and storage systems will drive demand growth.” While Matti Zhao still expects EV sales to increase by 20% internationally, she said the growth rate will be slightly lower than last year. “One of the reasons we expect slower growth this year is that 2022 has set the bar very high,” he said.

Iran announced this week that it had discovered the world’s second largest “white gold” deposit in the country’s north.

Meanwhile, Iran’s contribution is still unknown, as this week it announced the discovery of a huge lithium deposit in the north of the country, estimated at 8.5 million tons. If estimates are confirmed, it will be the second largest deposit in the world after Chile, which has 9.2 million tons of lithium.

The release of such a large amount of lithium on the international market could further accelerate the downward trend in prices. At the same time, however, it has the potential to stimulate Iran’s local economy, which, despite its high potential for oil and gas production, has been paralyzed by Western sanctions and the country’s isolation from the global financial system.