Crisis will eventually lead to opportunities for lithium miners.
Right now, a supply glut is forcing prices even lower. It’s also responsible for mass industry layoffs, and major lithium projects. Falling interest in electric vehicles isn’t helping either. Major companies, like Albemarle, were even just forced to cut its demand forecast for 2030 from 3.7 million tonnes to 3.3 million tonnes, a 10% decrease.
However, this may all be setting the stage for the next big lithium supply crunch.
As prices come down, it’s holding back reinvestment in new supply. Eventually, as demand begins to pick back up, prices could skyrocket again. We could start to see higher demand for electric vehicles, and green energy projects, which require lithium, once the Federal Reserve starts cutting interest rates.
Also, as noted by Albemarle CEO Kent Masters, Low lithium prices are “unsustainable” and will have to rise to trigger the supply investments needed to meet long-term demand growth, as noted by Bloomberg.
Again, crisis could lead to opportunity.
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Company: Albemarle (ALB) That being said, investors may want to buy the excessive fear in lithium stocks, like Albemarle (ALB), for example, which is already turning around strong. In fact, since late February, ALB ran from about $115 to a recent high of $142.07. From here, it could test $155 resistance. All on speculation lithium prices may finally be bottoming out. |
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| Company: Sociedad Quimica y Minera de Chile (SQM) Or, look at Sociedad Quimica y Minera de Chile (SQM), where CEO Ricardo Ramos sees a silver lining with lithium. As noted by BBN, “Looking forward, Ramos is optimistic about the lithium market in 2024, spurred by the growing demand for electric vehicles and battery materials.” |
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| Company: Global X Lithium & Battery Tech ETF (LIT)
We can also look at lithium ETFs, like the Global X Lithium & Battery Tech ETF (LIT). At $47.40 with an expense ratio of 0.75%, some of its top holdings include Albemarle, Tesla, BYD Co., Arcadium Lithium, Panasonic, and Sigma Lithium to name a few. If lithium is finally bottoming out as hoped, investors may want to jump into beaten-down lithium stocks today. |
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