Banter and general comments, page-25238

It is difficult, the data is mirky and open to a lot of interpretation.

To be clear, the numbers in China are not as rosey as our expert friends indicate. Let me put those numbers in chart form to help visualise.




If we look at this first graph we can see that YoY battery production in China has been growing. But is it growing enough? We have had some supply increases from DSO and elsewhere including our very own CXO. Has that supply evened out with demand? CXO has become a producer just at the right time. Financial risk is on for non-producers.

Let's look at that same data in terms of growth rates below:



What we can see is that we have had 2 very strong years of very high growth rates. In comparison the 22 vs 23 growth rate is very small in comparison. It is great that it is still growing, but I am personally disappointed that it is not growing fast enough. This growth rate does not support sky-high pricing that we saw last year. I have been a bull, but the data is showing that we need to be more realistic in our forecasts.

The problem is which forecasts to consider, this is China data. What is missing is the global perspective and the current world trend to diversify battery production from China. I don't have access to global numbers, how much is battery production increasing in Asia ex-China, Europe and US? Are we seeing a massive growth rate elsewhere because of attempts to diversify?

So what I can see from the data is that China does have a problem, and prices falling in China for me seems plausible by the numbers being produced to date. However, is this a global problem? That I am not sure of yet, but the data below is not all sunshine yet. Volume is good, plus average battery size continues to increase, but the numbers still don't justify continuing sky-high prices. Does this situation rectify itself soon? You would expect the production improvements just from Tesla this year Semi, Cybertruck and further gains of MY at Berlin and Texas to grow demand substantially in H2. It is a wait and see, but my fingers are crossed for a H2 turn around based on a world wide recession being avoided.



This is a short-term story, long term the story is very positive. My bull case scenarios for lithium/spod pricing are currently moderating based on the information I am seeing, and as retail, analysts get to see this way before I do.

Short term, this volatility provides accumulation opportunities until the market sorts itself out.

I hope that this provides you with some better insights and answers your question. There is no direct answer, we just have too many variables to forecast.