You gotta be joking!

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rastus64

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126

10/08/17

13:28

Post #: 26416893
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Originally posted by eshmun ↑

Of course the chart is bullish, every man and his dog is following and punting on spec lithium stocks.

This is just following the pattern of ANL, with the Chinese and a few of the in-crowd getting the cheap shares.

The lithium boom will snuff itself out. The direction of the stock prices of the Li developers is telling the story but no one wants to see. If demand was truly out stripping supply at the rate the Lithium bulls are claiming the share prices of the developers would be receaching for the stars, which they are not, and the developers would be leaving some significant proportion of their production uncontracted, which they are not, instead you have very opaque off take agreements that are linked to even more opaque market mechanisms.

When the source of revenue in an industry like this expands amongst more than a few participants, prices come down. The SQM/KDR "deal" is a classic case of a producer who has had it good, trying to keep its corner of the market. They can do this by slowing down a new source of hard rock product to market, which is what I believe they will do with Earl Grey. By doing this they sustain the price of their product in the short term. Many years later as demand increases they will have the option to still maintain their market share by bring new supply to the market.

By the time the Chinese start mining spodumene in Africa the commodity will have had its dash and it will just be relegated to another commodity which isn't in short supply any longer. Esh

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You gotta be joking!

AVZ Price at posting: 9.2¢ Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

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