Morning,
just over a week since the drop. Mainstream articles like below from *
https://unauthorised investment adv...nd-lithium-miners-look-cheap-experts-say/?amp
hopefully will push our share price back up there. Check out quote:
That’s a 70% discount to current prices.
High Voltage: Goldman Sachs is wrong about oversupply and lithium miners look cheap, experts say
June 6, 2022
https://unauthorised investment advice/wp-content/uploads/2022/06/giphy.gif
Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.
- ASX lithium stocks suffered selldown after major investment bank Goldman Sachs called top of battery metals boom
- Cowen disagrees, models 19% deficit to demand from 2023-2030
- Stock prices don’t reflect current high lithium prices: Jefferies
Lithium stocks suffered an astonishing selldown after major investment bank Goldman Sachs called the top of the battery metals boom in a note last week.
Industry experts aren’t buying it.
There is no oversupply coming: Cowen
Other investment banks aren’t buying it either.
In a note titled “Take Advantage of the Noise” Cowen says lithium stocks prices have been hit by these peer reviews on lithium oversupply and confusion around Argentine transfer taxes — issues that both appear overblown.
“EV driven demand growth cannot be satisfied by li supply in any year in our model, underpinning cash flow growth from volume additions and improved pricing,” Cowen says.
“We model a 19% deficit to demand from 2023-2030.”
While spot pricing may pull back from “breakneck levels” of +$US70k/t in 2023, producer pricing will continue to rise.
It’s important to note that the spot market reflects a very small amount of product. Most lithium is sold via contracts.
Here, if sustainable pricing can be achieved in the mid $US30k range, “the lithium space remains an extremely compelling investment”, Cowen says.
Earlier this week producer Allkem (ASX:AKE) announced the average price received in the June quarter would be 14% above prior guidance at US$40,000/t on sales of ~3,500 tonnes.
At current lithium prices, all producers are generating peak cycle returns, yet share prices are implying prices of $US18,435- $US23,716/t LCE, says financial services company Jefferies.
That’s a 70% discount to current prices.
“Based on our global view we believe supply fears will dominate pricing discussions,” it says.
“We expect another fly-up into year-end and prices only normalising to an economic ‘incentive’ level in 2026-27.”
Which ASX lithium stocks were hit hardest?
The massacre of lithium equities last week was wide-ranging and indiscriminate.
Despite raking in the cash of late, producers Allkem and Pilbara Minerals (ASXLS) were smashed 17% and 18%, respectively.
The PLS share price is now down to December 2021 levels.
The near term producers were also hammered, led by Sayona (ASX:SYA)down 22%, Liontown Resources (ASX:LTR) down 14%, and Core Lithium (ASX:CXO), down 8%.
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