Matt Fernley does a good job of explaining his mea culpa regarding his predictions on the lithium prices for the past 12 months. And I think he among others argue that the likes of Goldman Sachs also got their analysis wrong but happened to fluke the right answer.
My understanding is that demand for lithium actually held up okay and there was not the rush of lithium production from sources in the west that Goldmans and other investment banks had based their forecasts on. But what both GS and MT got wrong was that the level of upstream production in China was higher than they had assumed, with China domestic low quality lepidolite and brine producers churning out heavily polluting product at loss making subsidy backed prices that undercut ex-China producers. Apparently, another reason for the mistaken forecasts was that it was not obvious to outsiders that downstream producers in China had been building inventory in the year or so to mid-2023 and so by the latter part of 2023 their demand for new supplies of lithium was less than the outsiders had expected. The outsiders had been keeping tabs on upstream stockpiles in China - which were modest - but not on the downstream inventories there - which were abundant.
From what I have read the main reason why much of the lepidolite resources in China are still being mined is that they are being subsidised by their local governments and the Chinese battery producers. However they are highly polluting and very limited in scale so sooner or later as demand continues to increase they will be less able to undercut the producers in the big brine areas in Argentina and Chile and the big spodumene areas in WA and Quebec.
As for "these guys [aka the vampire squid aka Goldman] don't put out commentary to deliberately mislead their clients" ... pfffffft! You only have to watch the Big Short or read books like Fool's Gold by FT's Gillian Tett to see how psychopathic investment bankers can be. An anecdote: Forbes magazine ran for many years a quarterly round- table of well known market analysts. I recall in one encounter in 2006/07 the contrarian Marc Faber - who presented as a bit of an odd-ball but statistically was the most accurate forecaster of the regulars on the round-table - and Abby Joseph Cohen - Goldman's public face and uber stock market bull - got into a to-and-fro with Faber saying that a number of investment banks would cease to exist in the coming 12 months and Cohen saying that Goldmans would prosper through that period. As it happened both were right as although some investment banks did fail in the crash of 2007-08 Goldmans did indeed come out better than most. Turns out Goldmans had been betting against their clients - they were putting their clients into products and then they themselves were betting that those products would fail - and were eventually bailed out by the US Secretary of the Treasury (an ex-Goldmanite) who turned them and only them into a retail bank thus gaining for them backing from the US Government (and Warren Buffet). Also, go back and read the Michael Lewis book Liar's Poker in which he described how even back in the 90's investment bankers used to boast about "ripping the face off" their clients. Clients to an investment banker are like beef cattle to a grazier.
LTM Price at posting:
$6.65 Sentiment: Hold Disclosure: Held
(20min delay)