Article : Growth ahead for lithium demand, but supply should keep pace
Lithium product has risen in demand as more uses identified every day, the metal used in numerous products for instance; batteries of “cell phones laptops” among other digital devices which are becoming a key need over the decade. Need for the last used silvery-white metal has drastically fallen this resulted to a downward movement in the demand curve. Investors backed out from the investment affecting the distribution resulting to an outward movement of the supply curve. Positive market prospect on lithium raises its demand, a rise in demand results to movement of the demand curve upwards raising its prices while capacity stipulations remains the same.
The movement in demand of the lithium product has caught the attention of the mining industry, with increased projects on the rise over the precedent four years, while supply predicted to rise because of new investors coming into the market and existing manufacturers raising production. Without doubt the main item that hikes the demand is the battery industry, especially those used in electronic cars, its predicted by next year lithium powered cars will be on the rise worldwide. The rising demand moves the demand curve upward and the supply curve outwards, raising its prices. In 2010, “glass and ceramic” requirement took a large percentage in the industry, but the trend is changing rapidly due to increased demand for lithium. The growing market for solar and wind energy requires lithium to store power in their batteries in times when weather changes are unfavorable. The anticipated growth in demand expected to stabilize the market making the prices of the product remain the same at present levels.
The demand for lithium anticipated to rise resulting to an upward shift of demand as illustrated in graph A. This escalates to a rise in prices and amount demanded. The upward shift causes changes in liking of lithium by consumers furthermore, lithium product has popularized in use as more electrical devices require the metal. The effect will result to high demand as consumers will be willing to pay for the product at the high prices. Upward movement of demand hikes prices as providers will be more enthusiastic to sell at a greater quantity supplied; the high price of lithium due to increased demand will motivate more investors to venture into the product, thus enhancing its availability. Consumers will be reluctant in purchasing the product at first, because of the high price, nevertheless due to its importance consumers expected to agree with the price enhancing its demand.
Growth of technology globally has enhanced production of lithium, resulting to an outward movement of the supply curve, because of the upgraded technology as illustrated in Graph C. Producers will be willing to invest more in the production of lithium making it more available to consumers. The enhanced production will result to a rise in supply lowering its price, leading to an outward movement of the demand curve, as suppliers bring more products to market at lower prices, and consumers will be more willing to buy at the lower price. More lithium product will be available in the market, leading to a fall in price, raising demand. Availability of the lithium product will also be enhanced by new investors who will be willing to invest in the product. As its use continues expanding globally and becoming a necessity in everyday use, for instance cell phone devices require lithium in its battery, and the cell phone device has become a necessary product in everyday life whereby people cannot function without it.
References
Hill, M. (2011). Growth ahead for lithium demand, but supply should keep pace. Mining weekly, n.p. retrieved 13th July 2011 from
http://www.miningweekly.com/article/growth-ahead-for-lithium-demand-but-supply- should-keep-pace-2011-07-13
