Australia’s Orocobre Ltd warned on Wednesday that a downturn in U.S. and European car markets due to the coronavirus pandemic and ensuing factory shutdowns could hit lithium demand until early to mid-2021.

The warning comes as demand for commodities across the globe has suffered amid lockdowns to halt the spread of the novel coronavirus, with economic activity virtually grinding to a halt. U.S. oil prices on Monday temporarily turned negative for the first time in history and remain at near two-decade lows.

In China, the miner expects government stimulus and a strong performance from U.S.-based electric car maker Tesla to counter weak consumer demand, as factories in the country slowly restart operations following the lifting of restrictions.

Outside China, though, Orocobre expects the battery supply chain to be impacted by up to six months, with recovery in demand to be delayed until as far out as 2021.

“The Chinese market is also expected to experience weak demand with electric-vehicle customers purchasing opportunistically,” it said in a statement.

Global demand for green vehicles may also be hurt by oil prices at historical lows, making autos run on fossil fuels a more attractive option for consumers.

Production from its flagship Olaroz lithium facility in Argentina for the March quarter was 2,732 tonnes compared to 3,075 tonnes a year earlier, owing to lost days of production due to shutdowns for maintenance and pandemic restrictions.

The miner also withdrew its full-year 2020 production guidance citing production restrictions in Argentina and likely disruptions to lithium demand in the future.

Orocobre shares fell nearly 5% after the warning to a four-week low against a 2% fall in the broader benchmark in early trade.

Source: Reuters – 22^nd April 2020

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