Banter and General Comments, page-4777

Optimism returning to the lithium market following oversupply fears
Lithium’s story for 2018 was marked with fears of oversupply in a market where demand had yet to catch on. This bearish sentiment placed strong downward pressure on both lithium prices as well as lithium stocks, dampening the lithium market outlook.

On the demand side, in 2018 automakers made several announcements about new electric vehicle (EV) models alongside rising sales, particularly in China. “We were originally too pessimistic about the sales of EVs and the lithium demand for EV production at the start of 2018,” Roskill Division Manager David Merriman told INN. “But with these factors in mind we have increased our demand forecast for lithium.”

The move by battery makers towards the production of high-energy batteries is another potential positive for the market. Higher amounts of lithium are required to improve range and performance in these rechargeable batteries. “That incentive to longer-range is beneficial to us and to the industry,” said Eric Norris, President of Albemarle’s (NYSE:ALB) lithium global business unit.

The strong supply/demand fundamentals in the lithium market couldn’t fully placate the bears and last year we saw a chasm develop between positive market signals and lithium stock evaluations. There has been a real disconnect lately between demand out of the EV and battery industries, and lithium mining stocks, Chris Berry, founder of House Mountain Partners, told INN at Benchmark Minerals Week’s Cathode Conference. “My sense right now is that when we look back at 2018, it’ll be a year where valuations reset because there are some enormously cheap opportunities in the space right now based on all of the blood that’s been on the streets,” he added.

2019 to transition lithium market into stellar demand growth
What’s in store for lithium in 2019? Most analysts are quite optimistic that this year will be one of transition for the lithium market, with 2020 and 2021 bearing the fruit of that transition with a chance for real growth in the space.

The industry’s biggest players also have a lot of optimism for growth in the near term. Albemarle recently released its 2018 earning results showing better-than-expected gains in its quarterly profits, with growth projected to continue in 2019. The company says it expects lithium demand to grow at a CAGR of 21 percent from 70,000 tonnes in 2018 to more than 650,000 tonnes by 2025 on stellar growth in the EV and utility-scale battery markets, pushing the total lithium market demand to over 1 million tonnes.

“The momentum around electric vehicles has started to accelerate,” said Scott Tozier, chief financial officer at Albemarle. Tozier also said the company was “not forecasting any significant macroeconomic headwinds and have not seen any decline in our customer demand forecasts.”

In response to the expected dramatic increase in demand, many analysts are forecasting an increase in mergers and acquisitions (M&A) activity in the lithium sector over the near-term. Major lithium companies are already making headlines with a recent surge in consolidation activity in the lithium market.

https://thediplomat.com/2019/02/china-rushes-to-dominate-global-supply-of-lithium/

Maybe we will see in 2020/2021 which expert got it right!