The reality is reinforcing my view of lithium sector following a very similar cycle as iron ore did.
The bottom cycle would last for few months or even a bit longer, but share price is usually over-reacted within a shorter period, I expect the sector performance to bottom out shortly, although a few small producers might be forced to shut down or be bought out.
One big difference between iron ore and lithium is, long term outlook for iron ore is not very bright because China demand is about peaked (2018 iron ore import was down slightly by 1%).
China imported around 85% lithium last year.
It is estimated that China domestic brine lithium production to account for only 8% of the global production, domestic hard rock lithium production to account for only 4% of the global production in 2020.
China is likely to face a more serious shortage issue for lithium, imo.
AVZ Price at posting:
5.1¢ Sentiment: Buy Disclosure: Held
