Lithium Forecast: Lithium Stocks Will Be Wildly Bullish In 2023
The lithium market went through a dip in May and June of 2022. Mostlybig lithiumstocks recovered really fast, while other lithium stocks are consolidating.
We strongly recommend signing up to ourMomentum Investingservice to access our latest lithium stock selection, based on a very thorough analysis of the lithium market. We bring in structure based on the logic that the lithium market is following. Please check our research note “Lithium & Graphite top stock selection” available in the restricted area of Momentum Investing members (published on October 21st)!
Lithium forecast drivers
As explained above we see 3 drivers for the lithium market. We define the ‘lithium market’, in this context, as lithium stocks.
- The price of lithium. Think of it as ‘spot lithium.’ We discuss the lithium price chart in the next paragraph.
- The supply deficit in the lithium market. This one speaks for itself. We dedicate a section to this topic.
- Broad markets. Once broad markets confirm a bottom and start calming down, after a violent 2022, we see momentum return into the lithium market.
We discuss the first two items in the next sections. When it comes to the broad market conversation we recommend to read our articlesDow Jones 100 YearsandDow Jones 20 years.
Lithium price forecast 2023
Thelithium pricehas a phenomenal setup.
The 12 month price chart confirms that we have been predicting for a long time: the lithium price and lithium market will continue to remain hot. Note that lithium is The Hottest Commodity Of This Decade, The Only One At ATH.
The 5 year lithium price chart is insanely bullish. We don’t see how the lithium price will come down any time soon.
We expect the lithium price to be hot in 2023.
Lithium deficit prediction by 2025
The lithium price is rising for a reason. The lithium market is going to enter a supply/demand deficit by 2025.
It seems that the exact timing and magnitude of the lithium deficit varies.
As pointed out by Bloomberg in How Much Lithium Will the World Need? It Depends Who You Ask:
They continue:
Irrespective of the exact details of the deficit we see a continued confirmation of the lithium market deficit in other research.
Interestingly, the following data point suggests that the “gap between operating mines and demand in 2030 will be approx. 2Mt which is 5x higher than the entire market in 2021.”
Here is one more data point from Statista: projection of worldwide lithium demand between 2019 and 2030:
This is the projected demand for lithium:
We conclude that a supply deficit is very likely to hit by 2025.
Lithium market forecast 2023
Because of all of the above we believe that lithium stocks are the place to be in 2023.
That’s also what LIT ETF shows: a wildly bullish W reversal in 2022 which will set the stage for a bullish wave in 2023.
How to profit from this bullish lithium prediction?
Because of the coming deficit in the lithium market, the booming lithium price and softening conditions in broad markets, we believe that lithium stocks are the place to be in 2023.
In our research note “Lithium & Graphite top stock selection” (available in the restricted area of our Momentum Investing service) we have outlined the structure that the market is following. There are multiple criteria that play a role when selecting a lithium stock:
- Size of the lithium deposit.
- Richness of the lithium deposit.
- Expected year of production.
- Production volume.
- Cost of production.
- Offtake agreements.
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