Allkem General Discussion, page-1182

First 1182 Last

Share
Profile

Follow
Mirabiledictu1

1,776 Posts.

296

01/06/22

16:47

Post #: 61759862
Share

Originally posted by SeeTheWorld: ↑

Thanks @jonty

from Morgans....

What’s happened
The lithium sector has plunged in price today (AKE -13%, PLS -20%, IGO -12%, MIN -7%, LTR -19%) despite no notable movements in the lithium spot market. A report released recently by GoldmanSachs is calling the beginning of the end of the battery materials bull market. We haven’t seen the report but we’re told it references growth in Chinese production of an alternative lithium bearing mineral, lepidolite, which will smother the market. To our knowledge lepidolite has not been used extensively in commercial production and instead the hard rock market continues to be dominated by pegmatite, or alternatively lithium carbonate produced from brines. Separately there has been some confusion around reports that the Argentinian government has set a $53k/t reference price for lithium carbonate. We have discussed this with investor relations at AKE who have confirmed that this in relation to royalties, it will not override commercial arrangements with customers and that AKE is not anticipating materially different royalty costs.
Our view
Our view on the supply shortage has not changed. Clearly supply will increase in coming years but demand is also expected to grow strongly. Contract prices are still well below the spot market so there is still room for contract prices to increase in the coming quarters. Prices are expected to peak next year though and clearly the market is being very quick to anticipate when this might happen. We think that with the strong pullback there is enough upside to retain our ADD rating on AKE with the expectation of strong increases in cashflow. We acknowledge that the price reaction today highlights the risks in the sector and the volatility could be enough to keep some investors on the sidelines regardless of whether the concerns about alternative production growth are warranted.

Expand

I recall Morgan Stanley predicted in march 2018 that lithium prices will fall by 45 % by 2021. Not a bad call .Contrary to many analysts and market sentiment.
dejavu?

AKE Price at posting: $11.60 Sentiment: None Disclosure: Not Held
1 Upvote

0 Great analysis

Reply

Top Stories

AII

Inside the depths of Panasqueira: A legacy carved in rock

Thursday's HotCopper trends: Mystery Trigg halt, Neurizon FDA feedback | July 10

Listen: HotCopper Wire Podcast 017 – RBA holds the toppings

ASX Market Close: BHP shares rise with iron ore – but so does CBA

TMG

Investors cautious as Trigg Minerals issues unusual trading halt

First 1182 Last

Add to My Watchlist

What is My Watchlist?

A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.

Allkem General Discussion, page-1182

Top Stories

Inside the depths of Panasqueira: A legacy carved in rock

Thursday's HotCopper trends: Mystery Trigg halt, Neurizon FDA feedback | July 10

Listen: HotCopper Wire Podcast 017 – RBA holds the toppings

ASX Market Close: BHP shares rise with iron ore – but so does CBA

Investors cautious as Trigg Minerals issues unusual trading halt

Featured News