PLS chart, page-13697

I have been thinking about CATL. Before the sale they had about 6%. After the first sale of 67m shares they had less than 5%, so subsequent movements aren't necessarily reported. The first and second sale allowed shorters to buy back without causing a squeeze. If CATL are going to sell down to zero, then there are probably another two large chunks to be sold off market yet. That suggests to me that the shorters have a way out if they continue to short, but that depends on the price CATL are will to accept for their shares. If they say "nah 410 is our minimum", then the share has to stay above that, if they are willing to take less then whatever they set as their price is about the limit the shorters can safely use. Either way it means that the shorters can operate in the knowledge that the risk of a squeeze is much lower than otherwise, and it becomes a game of brinkmanship: How badly does CATL want out and how convincing can the shorts be that the price will stay below their desired exit price.

The SVB collapse overnight - which seems to have caused the sell off in the markets on Friday - certainly hasn't helped us. The news flow over the weekend from the US is going to be critical. If it looks like the powers that be are going to orchestrate a bailout then the market should explode up on Monday, if not, then the collateral damage from the bank's collapse is going to feed a dump on Monday. SVB was a major lender and deposit holder for silicon valley start-ups and banker to ROKU for 25% of its cash, and Roblox for 5%, but 100% to a whole host of startups, who will not be able to meet payroll as a result. Payroll failure in the US pierces the corporate veil so directors become personally responsible, thus boards will declare bankruptcy fast if it looks like payroll can't be met, so cascading corporate collapses will be rapid.

The thing is, the SP for PLS is on a knife edge at this point. It seriously can not go down significantly (if at all) without breaking the TA models for a rising SP, and flipping us into a falling model. TA and FA says it should be going up, but the external market/economic forces are right now acting as a whopping great hammer. If the world prices a serious recession in then that changes everything about expectations of future cash flows as ultimately the price of raw materials is dependent on the sale of cars, which will drop away during the recession. On the other hand, if China is seriously going to go to war in the next couple of years they are very likely to be stocking up on raw materials (like oil, lithium, nickel, steel, gold, food, etc) which will keep raw material demand and prices high for a while (even while the sales of the end product are falling) - but this wont be apparent for a couple of months, and probably wont show in Li Carbonate prices ever which will be being stockpiled and the prices for LiCO3 would continue to fall, while the spod prices feeding the stockpile rise (a bit like what we have actually been seeing). LiCO3 can be stored long term considerably more efficiently that spodumene (takes less space), whereas LiOH can not be stored for more than 6 months. So rising spod (high demand) but falling LiCO3 (insufficient demand OR reduction in cost of conversion) implies the LiCO3 is being stockpiled (or costs of conversion have fallen).

Meanwhile the west has drained its ammunitions stocks in the Ukraine, some of which missiles take 2 years to build, and require materials sourced from ... you guessed it ... China, and the US Fed seems to be hell bent on plunging the West into an economic collapse to control inflation caused by excessive Government fiscal spending over the last couple of years (which they are still doing at even as the monetary screws are being tightened).

This all seems to be coming to a head now, and the news flow over this weekend is probably going to be critical to how the markets react over next week. The collapse of SVB - an otherwise unknown bank in Oz - is looking like the straw that did in the camel. The falling LiCO3 is the superficial excuse for why Li miners are being hammered in spite of their profitability, but if I'm right in my suspicion, then it isn't going to be rising anytime soon. At best it will plateau as China car manufacturing lifts.