UBS(US:UBS)2025-11-11 06:06Summary of Key Points from the Conference Call Industry Overview - The focus of the conference call was on the Battery Energy Storage Systems (BESS) and its impact on lithium demand. BESS is becoming a significant demand driver for lithium, alongside electric vehicles (EVs) [2][3]. Core Insights and Arguments 1. BESS Demand Growth: - Projected BESS demand is expected to grow from 396 GWh in 2026 to 873 GWh by 2030, representing a 24% CAGR from 2025 estimates. This will account for 22-26% of total battery demand [2]. - Corresponding lithium carbonate equivalent (LCE) demand is estimated at 360 kt in 2026 and 680 kt in 2030, with an incremental demand of approximately 90 kt per annum over the coming years, compared to 170 kt per annum from EVs [2]. 2. Market Dynamics: - The call highlighted that global power demand is rising faster than expected, with U.S. electricity growth averaging around 3% annually, surpassing earlier projections of 1.8% [3]. - Major technology firms are investing in new generation capacity to meet growing power supply needs, often with clean energy mandates [3]. 3. Supply Disruptions and Price Forecasts: - Recent investigations into Chinese mining licenses and potential production curtailments have created uncertainty in lithium supply. Current spot prices for spodumene are around US$940/t [4]. - Despite supply disruptions, the anticipated increase in BESS demand could offset these issues, with a forecasted surplus of only 55 kt in 2026 in a market of +1.8 mtpa [4]. 4. Lithium Price Outlook: - UBS forecasts that spodumene prices will improve by another 20% by mid-2026, averaging US$1,100/t to US$1,350/t over the next few years. The long-term price target remains at US$1,200/t [5]. 5. Incremental Demand from BESS: - BESS is expected to contribute 30-40% of the incremental overall lithium demand in the coming years, indicating its growing importance in the lithium market [18][20]. Additional Important Insights - The call emphasized that while EVs remain the primary driver of lithium demand, BESS is increasingly becoming a critical component of the global lithium demand landscape [20]. - The potential for a small surplus in 2026/27 is anticipated, with a shift to a deficit beyond 2028, highlighting the evolving nature of the lithium supply-demand balance [18][23]. This summary encapsulates the key points discussed in the conference call, focusing on the implications for the lithium market driven by the growth of BESS and the associated demand dynamics.