IMG URL: http://cdn.oilprice.com//images/tinymce/Mil1710B2.png
"Lithium will be the biggest disrupter on the energy market. And the big winners will be those that have the funds, expertise and capacity to ramp-up production as quickly as possible," says Millennial's Scarr.
The Pricing Game
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We are also at a very crucial moment in time for the next round of lithium contracts, with some very interesting debates about how tight supply actually is, and where prices might be going.
Formal talks for Chinese lithium contracts are set to begin in the fourth quarter, but buyers and sellers are already holding informal talks. There is a bit of uncertainty because of the short-term uptick in production of lithium in Australia with two new projects online, but delays in this supply could also be a key determinant of next year's prices. Galaxy Resources Ltd will start shipping its first lithium to China in December now—two months later than expected, and even then it could take three months or more to turn this raw material into lithium carbonate and hydroxide.
"This means prices for 2017 could very well respond upwards," says Millennial's Scarr.
As the debate unfolds, Macquarie Research in early August suggested we might be looking at a temporary state of lithium oversupply beginning next year, thanks to the new Australian projects. But Macquarie didn't have the benefit of knowledge at the time that the first of these shipments would be delayed until the end of this year.
Lithium expert Joe Lowry, president of Global Lithium LLC, didn't mince words when he took on Macquarie's figures in his twitter feed, calling on analysts to revert to "common sense" here and noting that problems in lithium ‘execution' will continue to keep prices up.
"Execution issues continue to plague #lithium supply. is the poster child but not alone. Shortage continues. Don't tell @Macquarie
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"Our new fuel is stored energy," says Scarr. "Lithium is key to that storage, and supply has some serious catching up to do in this respect. We've already seen delays coming out of Australia that indicate this market is still tight."
The Lithium Fantastic
With supply about to become as tight as it will be for Lithium, the land rush takes on new meaning.
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