PRICES Convergence more likely than crash
As a result of these most critical supply and demand dynamics, it is important to remember the fundamentals of the lithium industry have not changed.
It continues to operate as a niche, speciality industry that is serving a high spec end market in lithium ion batteries. This analysis has not even discussed the other 50% of supply that serves a wide variety of growing markets and how this will impact demand.
Quite simply, to impact the battery grade lithium carbonate and lithium hydroxide prices that Benchmark Mineral Intelligence assesses on a monthly basis, battery grade product has to be produced and sold to cathode and battery makers.
Producing DSO or even spodumene concentrate and adding it to stockpiles is not creating new LCE supply. Then understanding the conversion capacity in China – what is real versus what is conjecture, what is technical grade versus what is battery grade – is key to understanding how much of these feedstock makes its way into batteries. Only then will you see a price correction on the global price averages.
Under the most likely scenario, we can see the prices of Chinese lithium chemicals and rest of the world prices converging.
GXY Price at posting:
$3.48 Sentiment: Buy Disclosure: Held
