Is this the lithium short squeeze we've all been waiting for?
By Kerry SunMon 19 Feb 24, 11:36am (AEDT)Source: iStockStocks in article
Commodities in article
KEY POINTS
- Lithium market potentially shifting from surplus to deficit in 2024 due to possible shutdown of CATL's lithium mine
- Albanese government considering tax credits for nickel and potentially extending to lithium miners amidst market turmoil
- Pilbara Minerals and peers experiencing unusual strength, with PLS seeing a slight decrease in short interest
Many people have been burnt trying to pick the lows of this lithium cycle. However, the recent strength shown by a bellwether name like Pilbara Minerals (ASX: PLS) could be onto something.
Lithium Supply Speculation
Barrenjoey reported an unconfirmed shutdown of CATL's Jianxiawo lithium mine before China's Lunar New Year. CATL (Contemporary Amperex Technology Limited) is one of China's largest battery manufacturers and downstream lithium players.
The battery major was reluctant to continue lithium carbonate production at sub 95,000 yuan (US$13,000) a tonne. This could take out approximately 3% of global supply and shift the market from a 1% surplus to a 2% deficit in 2024. CATL has yet to confirm an official shutdown.
In the last trading session before the week-long Lunar New Year holiday, lithium carbonate futures on Guangzhou Futures Exchange fell 1.4% to 96,300 yuan (US$13,500) a tonne. So the price action doesn't exactly line up with the above shutdown.
Labor Plans Tax Credits
The Albanese government, as reported by the AFR, is fast-tracking a system of production tax credits to try to protect the beleaguered nickel mining sector. The article also notes that the government is prepared to extend the credit to lithium miners, if prices continue to spiral.
Last Friday, Federal Resources Minister Madeleine King placed nickel on the government's official Critical Minerals List. This decision allows companies to tap into additional financing via the $4 billion Critical Minerals Facility and related grants.
Lithium Related Media Articles, page-20989
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