Compelling reward/risk ratio, page-132

I'd say there're only around one month left for shorters to cover before getting burnt badly.

Lithium China spot price bottomed in early December, almost identical to iron ore price bottomed in early December 2015 after dropping around 80%. Iron ore price bounced 64% between late January and March 2016. Lithium spot price dropped harder than iron ore price, it should bounce harder at the latest late next month, imo.




Iron ore price bottomed in December 2015 after around 80% drop.
In December 2015, Goldman Sachs further cut its price forecast for iron ore to US$38 per ton for 2016, and tipped iron ore price to fall to US$35 per ton in 2017 and 2018.
The reality obviously proved GS was wrong.





In recent GS lithium forecast, they put massive lepidolite production from China in 2024 (252kt LCE), which majority would come from CATL newly built production (it delayed by at least 6 months), their production cost would be at least CNY125,000 per ton (which is uneconomical at current spot price), also, its production capacity is significantly overestimated by one reputable analyst. CATL stated their three stage production will reach 120ktpa LCE, some media reported as high as 200ktpa LCE, but the real case is more likely to be 83.4ktpa LCE for all stage 3 production. Currently is ramping up the stage 1. The all in sustainable cost could be as high as CNY195,000/t, that's coincidently close to CATL's offer to major carmakers at CNY200,000/t. CATL owns 65% of the lepidolite project, the remaining is owned by local government, CATL needs to pay royalty of minimum CNY10,000, and up to CNY30,000 per ton. So AISC will not be cheap.

The oversupply thesis is way overstated, imo.
LTR 192m shorts, good luck!!!

All imo.