The above was my first post on this thread on 7 April 2024 cautioning lithium hodlers to better understand adverse industry developments in the EV/Lithium space.
That was when LTR traded at $1.40 and PLS at near $4, since then both have declined by -40pc and -28pc respectively. 4 months later, hope for higher lithium prices have instead turned into despair of new lows.
I even said in this thread that ALB’s actions do not reflect a transitory period of difficulty for lithium, yet lithium hodlers fixation with the LT prospect for EVs continue to blind them from exiting before things got worse.
And things are about to get even worse for lithium stocks despite looking like it has bottomed. And I said that it hasn’t bottomed because market participants continue to be enthused to buy the dip and we haven’t seen listless trading that typically earmarks a winter hibernation of no interest.
1. Lithium prices have sunk to the abyss and continue to stay low for an indefinite period
2. Chinese led Ev growth in both China’s domestic market and global expansion is likely to be unsustainable and start tapering soon
3. Forward quarter reporting by PLS and US major lithium producers would further reflect continued challenges, driving existing ASX lithium premium valuation to narrow
4. Conditions favour shorts making gains during winter
5. More survival driven actions by lithium stocks including CR adversely impacting sectoral sentiment
6. Market correction ahead would punish sectors in decline disproportionately - flight to quality rather than bargain basement opportunity. The bargain basement narrative only driven by stale bulls caught holding due to constant denial
7. Auto industry facing extended consolidation amidst demand and auto delinquency challenges.
8. EV growth is at the expense of lithium prices; when EV demand crashes (they will on recession) lithium prices could fall even more than all the instos analysts have forecasted; expect the analysts surprised proven wrong to further downgrade lithium stocks as time progresses ( before that, their own institutions will short them !)
Today the SC6 prices have dropped even further than what Goldman, UBS and Citi thought possible - lithium holders thought they had a lower forecast due to their agenda. But even the market has proven them wrong- SC6 has dived to $770 !!!
