Oversold lithium could be about to rally

Meanwhile, Roskill has predicted that the shift to higher-nickel-cathode materials will push many lithium producers to favor production of lithium hydroxide over lithium carbonate thus taking some pressure off the lithium carbonate supply side. The firm has forecast lithium demand to expand by a brisk 21 percent annual clip between 2018 and 2025 with demand expected to grow 13.5 percent in the current year.

But, of course, no lithium bull thesis would be complete without the EV angle.

Currently, the EV market accounts for about 47 percent of global lithium demand. That, however, is expected to drastically change as EV penetration rates coupled with the ongoing trend of electric vehicles using larger battery packs that yield longer ranges leading to electric mobility gobbling up 83 percent of lithium supply a by 2027.

FFastmarkets has predicted EV penetration to hit 15 percent by 2025 from 2 percent currently. EV demand has actually been beating estimates and is constantly being revised upwards to reflect this. The EV explosion is expected to drive a nearly six-fold increase in lithium demand for the forecast period.

IMG URL: https://d32r1sh890xpii.cloudfront.net/tinymce/2019-01/1548715433-a6.png
Source: Infinity Lithium company presentation

Key lithium trends to watch in 2019 and beyond

• Lithium carbonate prices will steady in 2019 before picking up steam starting 2020
• Lithium hydroxide prices could soften a little bit after remaining resilient in 2018
• China will become less important as a global price trend driver as demand rapidly builds up in other key markets

Miller advises investors to keep an eye on new spodumene production, particularly how quickly it can be integrated into the chemical and converter supply chain and turned into either lithium carbonate or hydroxide. A slower ramp is likely to lead to supply constraints and raise prices and vice-versa.

Link to article: https://oilprice.com/Energy/Energy-General/Oversold-Lithium-Could-Be-About-To-Rally.html