Banter and general comments, page-17713

And Rodney Hooper's take on the GS reforecast.

There are a lot of steps and consequentially time between when lithium units start as Spod ore after going through a concentrator to when it is delivered to the customer in a battery. As Rodney correctly notes, the amount of ore in this supply chain will grow as EV volumes grow. If inefficiencies like Chinese port delays occur, it gets bigger. I'll assume it takes half a year for ore to leave Australia, be processed into Hydroxide, then a cathode mix, then a battery and then be included into an EV (I don't know how long it takes but it is clearly months not weeks). If EV demand is 400kt then 200kt is required for the supply chain. If EV demand grows to 900kt then 450kt is also needed for the supply chain. EV growth would create another 250k of supply chain demand (450-200). In trying to make sense of the GS's "restocking demand" Mr Hooper presumes this is what GS is talking about and notes it will grow over time not disappear to a non-existent demand item.

I'm now wondering whether GS actually even has this supply chain consumption of Lithium in its model. GS's lithium model will almost certainly be a reworked version of another metal like Copper. The supply chain of concern for most over metals is shorter and there is no exponential demand. You basically don't complicate the model by trying to model in-transit metal as its stable over time and not an issue impacting price or volume. You do however need to model the stockpile of inventory for example how many barrels of oil are held in storage or how large are copper inventories are. Given the problem that observed demand is very strong but they can't account for all the product in the model, this gap has been thrown in as restocking demand. I suspect GS will never see a post like this on HC but if they do I would suggest they need to look at the significant production losses that occur along the pathway from Spod to EV batteries. They also need to look at the increasing inventory needed to support the supply chain. With these two factors included, historical demand is higher which better explains what's happening with price. With this higher starting point, percentage increases create larger future demand estimates. The short-term surplus they forecast may disappear. The model plug "restocking demand" is probably not needed.