Good short interview with Tianqi’s CEO talking about supply,...

Good short interview with Tianqi’s CEO talking about supply, demand, pricing which I’ve summarised below.

For those not familiar with Tianqi, it is probably China’s largest Lithium company with a market cap about double Ganfeng’s.

I think it’s reasonable to assume he knows a bit more about the market than Goldman Sachs and very telling his first reaction to a question on GS was to laugh.

As we know virtually all Lithium stocks are well off their highs. IMO the market doesn’t believe that current prices will last which was not helped by the Goldman Sachs report (who then bought into a number of Lithium stocks!). Listening to interviews with Tianqi’s CEO, Fastmarkets, Benchmark etc - the people who know the industry gives a very different view to that of GS.

And the stock highs I’m talking about were set back in April where those stock gains did not represent the massive increase in Lithium pricing from late last year. Prices since April have maybe plateaued despite China’s lockdowns. Listening to these interviews/commentaries it’s not rocket science to see these Li prices are not coming back down any time soon.

When will the market catch on?

For long term investors it doesn’t matter, the market tends to have a herd mentality so it can happen very quickly. Later this month we have Allchem & Pilbara releasing their Quarterly results, Alchem were forecasting $5000/t SC6, PLS will be similar. If the market sees these contract prices & commentaries it might just twig. In the US we have Livent, Albemarle, SQM etc releasing their results in early August - that could also be a trigger.

https://youtu.be/CdLnOqdnJdc

- Presently produce 45k t of Hydroxide/Carbonate, in next 3 years plan to go to 110k (my comment - this will go no where near satisfying the demand he mentions below)

- Made over $5b last Q, pricing set by relationship between supply/demand, in next 2-3 years we won’t see any new outcomes of spodumene or brines so must be still a shortage of supply

- Demand is strong with new EV/battery plants, for example one of our customers is expanding to 3 times their current production

- Re Goldman Sachs report - firstly a laugh, I don’t agree, I’m inside the industry we know it very well, greenfield projects take a long time to open

- There are some projects opening up which is only positive because supply will never catch up to demand

- Energy storage is going to increase 3-4 times, re EVs from customer feedback over next 3-4 years expect 4-5 times growth