...UBS SC6 forecast for 2025 and 2026 is even more devastating that I had imagined.
...A more protracted lithium winter hibernation means more downside room especially especially for ASX lithium producers.
...The research houses were wrong about their lithium price forecasts, it is much worse than they had predicted. It won't take long before analysts start revising their models and downgrade their valuations even more.
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Well, SC 6% prices are already averaging $733, considering the 4 SC prices (China, Australia, Brazil & Zimbabwe) currently quoted by the SMM. Perhaps UBS is assuming a slight price rebound before 2025 to keep SC prices around $750 by next year.
..just 2 months ago on 2 July 2024, UBS made this forecast which had 2026 SC6 price at $1,100; now it has revised it lower to $725!!
UBS
UBS has been relatively quiet on lithium for some time, so for me, it makes Friday’s note even more interesting within the context of the recent plunge in lithium prices. Here are the key takeaways from their latest report:
“Despite the weak demand outlook, we continue to see new supply come to the market…lithium markets remain well-to-over supplied”.
“We expect prices to stay lower for longer and have extended market surpluses in our forecasts”.
Broker cites “weak ex-China demand on stagnating penetration rates, rising PHEV share, and the rollback of EV targets/support and increased protectionism by western nations” as a key demand-side factor.
On the supply-side, the broker notes “we continue to see new growth and have added significant new supply in this update”.
“We have lowered our lithium price forecasts with spodumene SC6.0 CFR China -10%/-7%/-4%/-10% over 2024/25/26/27E to US $1,015/1,000/1,100/1,300t.” (The broker notes they now sit around 20% below consensus forecasts).
