some lithium updates....The Lithium OutlookWhile the supply side...

some lithium updates....The Lithium Outlook

While the supply side of the lithium equation was in line with expectations the demand side was not.This led to prices falling.What many of the analysts recently got wrong was the declining year on year growth figures for EVs.Right now, we are in an interesting position - where demand has not lived up to expectations.This has triggered the downcycle in lithium price.Generally, demand changes quickly, but supply does not.With prices for lithium expected to be subdued, capital may not flow as much into new lithium supply. However, when new demand comes online, prices for lithium will return.And so the cycle will continue.How quick the price cycle returns depends on how quickly the demand picture returns for EVs.We think that the geopolitical interests in achieving net zero as well as nation security concerns over supply chains will drive policy that drives this EV demand over the long term.BASF - How Battery Chemistry is ChangingIf you were born before 1990, you may best remember BASF as the blank video cassette maker.Turns out this giant German firm does a lot more than just producing archaic media items…As a chemical maker, BASF plays a key role in the EV battery supply chain, as it buys plenty of raw materials.Dr Bill McPhee, a Regional Business Development Manager from BASF presented at the Benchmark event to provide a downstream perspective. BASF is aiming to not only become a leading global battery producer but also a leading battery recycler.As a German company, Dr Bill was able to present how BASF is ensuring its products comply with EU regulations for battery passports and source ESG friendly raw materials.Battery recycling will also start to emerge as a bigger part of the supply chain, however it's very early days for that business model.Dr Bill also ran through how battery chemistry is changing. The key takeaways was that there will be a lot of different battery metal chemistries including NMC (Nickel-Manganese-Cobalt) and LFP (Lithium-Ferro-Phosphate). With the latter presenting an attractive opportunity, particularly in China.Final thoughts on the Benchmark World TourIt is an interesting time to be an investor leveraged to the battery metals thematic.The prices of many of these commodities have fallen, but the long term outlook hasn’t changed.The insights presented by the Benchmark analysts supported our battery metals investment thesis that the “electrification thematic” will drive commodity prices higher over the long run.However, in the short term, a reduction in money supply particularly in China has led to lower demand and a cooling in the commodity market.Long term, the West will need to introduce policy that drives back this demand - IF it want’s to decouple itself from China and achieve its net zero goals.