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Lithium prices are rising at their fastest pace in years due to rising demand for rechargeable batteries and supply disruptions. Due to high-density energy storage, the metal is used in rechargeable batteries for electric cars, smartphones, laptops, and other electronic devices. Plus, the high cost of converting the metal into industrial use has boosted prices by 240% in 2021, according to research firm and price provider Benchmark Mineral Intelligence, as quoted on street.com.
As a result, Global X Lithium & Battery Tech ETF (LIT - Free Report) , which tracks the performance of the largest and most-liquid listed companies that are active in the exploration and mining of Lithium or the production of Lithium batteries, gained more than 40% last year (read: Industrial Metal ETFs Win in 2021: What Next in 2022?).
2022 is Upbeat Too for Lithium
Further rise in lithium prices is likely as supplies for industrial use are incapable of meeting higher EV demand. The lithium-ion batteries are used for electric vehicles and energy-storage systems, and demand is high as the world is trying to transition from fossil fuels.
Simon Moores, CEO of Benchmark Mineral Intelligence, told Emerging Tech Brew that the EV industry is already facing a shortage of battery-grade lithium, and that price volatility will be a “three-year thing,” as quoted on a morningbrew article.
Anglo-Australian miner Rio Tinto Plc's lithium project, which Serbian authorities canceled licenses for last week, is likely to extend the supply crunch until the middle of the decade, according to industry experts. With hard rock mines, Australia is the world's leading supplier. Argentina, Chile and China produce it mostly from salt lakes.
Chinese battery-grade lithium carbonate prices continued to record solid gains due to tremendous spot supply crunch, as consumers are continuing to boost their inventories ahead of the Jan 31-Feb 6 Chinese New Year holiday, per an article published on metalbulletin.com.
While this indicates a short-term surge in lithium prices, a long-term price rally is also in the cards as the leading producer Allkem said on Jan 18 that it expects pricing in the first half to increase to around $20,000 a ton at the point of loading, up about 80% from the half-year to December 2021.
ETFs In Focus
Against this backdrop, one can bet on lithium ETFs with a medium-term view.
The underlying Solactive Global Lithium Index tracks the performance of the largest and most-liquid listed companies that are active in the exploration and mining of Lithium, or the production of Lithium batteries. LIT charges 75 bps in fees.
The EQM Lithium & Battery Technology Index seeks to provide exposure to global companies deriving material revenues associated with the development, production and use of lithium battery technology. BATT charges 59 bps in fees and yields 2.46% annually.
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Lithium Hits Record: Bet on These ETFs
Lithium prices are rising at their fastest pace in years due to rising demand for rechargeable batteries and supply disruptions. Due to high-density energy storage, the metal is used in rechargeable batteries for electric cars, smartphones, laptops, and other electronic devices. Plus, the high cost of converting the metal into industrial use has boosted prices by 240% in 2021, according to research firm and price provider Benchmark Mineral Intelligence, as quoted on street.com.
As a result, Global X Lithium & Battery Tech ETF (LIT - Free Report) , which tracks the performance of the largest and most-liquid listed companies that are active in the exploration and mining of Lithium or the production of Lithium batteries, gained more than 40% last year (read: Industrial Metal ETFs Win in 2021: What Next in 2022?).
2022 is Upbeat Too for Lithium
Further rise in lithium prices is likely as supplies for industrial use are incapable of meeting higher EV demand. The lithium-ion batteries are used for electric vehicles and energy-storage systems, and demand is high as the world is trying to transition from fossil fuels.
Simon Moores, CEO of Benchmark Mineral Intelligence, told Emerging Tech Brew that the EV industry is already facing a shortage of battery-grade lithium, and that price volatility will be a “three-year thing,” as quoted on a morningbrew article.
Anglo-Australian miner Rio Tinto Plc's lithium project, which Serbian authorities canceled licenses for last week, is likely to extend the supply crunch until the middle of the decade, according to industry experts. With hard rock mines, Australia is the world's leading supplier. Argentina, Chile and China produce it mostly from salt lakes.
Chinese battery-grade lithium carbonate prices continued to record solid gains due to tremendous spot supply crunch, as consumers are continuing to boost their inventories ahead of the Jan 31-Feb 6 Chinese New Year holiday, per an article published on metalbulletin.com.
While this indicates a short-term surge in lithium prices, a long-term price rally is also in the cards as the leading producer Allkem said on Jan 18 that it expects pricing in the first half to increase to around $20,000 a ton at the point of loading, up about 80% from the half-year to December 2021.
ETFs In Focus
Against this backdrop, one can bet on lithium ETFs with a medium-term view.
Global X Lithium & Battery Tech ETF (LIT - Free Report)
The underlying Solactive Global Lithium Index tracks the performance of the largest and most-liquid listed companies that are active in the exploration and mining of Lithium, or the production of Lithium batteries. LIT charges 75 bps in fees.
The Amplify Lithium & Battery Technology ETF (BATT - Free Report)
The EQM Lithium & Battery Technology Index seeks to provide exposure to global companies deriving material revenues associated with the development, production and use of lithium battery technology. BATT charges 59 bps in fees and yields 2.46% annually.