Lithium prices, page-351

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Stephan90

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03/08/22

07:18

Post #: 62888929
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Originally posted by Stephan90: ↑

interview with Daniel Jimenez:

"Prices are a consequence of supply and demand, and in this market where we have an extreme shortage of lithium today, it's a little bit down now, I think primarily because of Chinese lockdowns, but that gives you a sense of where prices could be on a permanent basis.
But I think they could be even higher. If you think that today’s production is slowed down by supply chain disruptions, by chips which are not there, by the lockdowns in China, imagine what could have been the price back in March, April if none of that would have been happening. So I think there is room for prices to increase further.
Is it sustainable long term? It depends on what you think of the long term, but I would think that prices will remain high or very high, and by that I mean above US$40 (per kilogram), at least for the next three, four years. That’s simply because demand is going to continue growing, and the incremental supply which is going to be put into the market will not be sufficient to satisfy that demand. Therefore, lithium would be a limiting factor for the increased penetration rate of electric vehicles (EVs).
Now what happens if we are talking five years from today and onwards? Well, today we're seeing a lot of money being put into the industry. We will see the consequence of that in terms of output of production, five years from now. And yes, there could be a moment where there’s a balanced market and prices could adjust downwards. To what level at that point? Those five years will be years in which we will see prices above greenfield development incentive price levels, so probably above US$30. So from a producer's perspective, whoever is producing today should have 10 years of very, very high prices relative to what we were imagining prices were going to be three years ago."

Daniel Jimenez: There's Still Room for Lithium Prices to Grow Further (investingnews.com)

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Btw. combine Daniel Jimenez's statement on future prices with Allkem's production expansion plans and you are looking at an undervalued stock.

"by that I mean above US$40 (per kilogram), at least for the next three, four years"

If you multiply 40,000 USD / ton * 125,000 tons = 5,000,000 USD revenue (and high margins) in 2026.

Allkem is valued at less than 5 billion USD as I write this.

https://www.datocms-assets.com/53992/1649117233-strategy-presentation_v17-final-for-asx-release-reduced.pdf

Last edited by Stephan90: 03/08/22

AKE Price at posting: $11.16 Sentiment: Buy Disclosure: Held
12 Upvote

2 Great analysis

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Lithium prices, page-351

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