Lithium carbonate prices hit a new high at the close of 2021, as a global supply crunch and a demand rush for the lightweight metal continued to push up costs.

Benchmark Mineral Intelligence's battery-grade lithium carbonate EXW China price broke $40,000 per tonne for the first time on the final day of the year, reaching a peak of $41,925/t on Dec. 31, 2021. The assessed price ultimately landed at a midpoint of $39,250/t, approximately 485.8% above the year-ago assessed cost, according to the price reporting agency.

"This latest assessment represents a huge 25% [month-over-month] increase in Chinese carbonate prices driven primarily by strong demand from the electric vehicle battery sector throughout 2021, compounded by seasonal restocking of lithium carbonate inventories ahead of Spring Festival 2022 in China," Benchmark Mineral Intelligence said Jan. 1. "Meanwhile, lithium carbonate producer inventories have been depleted on continued high demand and remain at low to non-existent levels."

The upward momentum in prices for lithium carbonate, a critical ingredient in most rechargeable batteries, was also aided by the increased use of lithium-iron-phosphate, or LFP, batteries. Lithium carbonate is often a preferred feedstock in the lower-cost LFP batteries used in short-range electric vehicles that are popular in China.

"Battery-makers have passed the cost increases — at least in part — on to their customers," S&P Global Market Intelligence senior analyst Alice Yu said in a Dec. 17, 2021, report. "Lithium costs in LFP batteries were up 219% on a kilogram-per-kilowatt-hour basis in November from January levels, while the price of the LFP battery rose 132% over the same period, according to price data from Shanghai Metals Market."

Passenger plug-in electric vehicle sales could reach 9.6 million units in 2022, up from 3.1 million in 2020, according to Market Intelligence analysts. The bullish market has automakers scrambling to secure enough lithium and other raw materials to meet the anticipated rise in electric vehicle purchases in 2022.

Market Intelligence analysts expect a shortfall in lithium chemical supply of 2,000 tonnes of lithium carbonate equivalent in 2022, with the deficit potentially widening to 50,000 tonnes LCE in 2025.