This fund is betting Wall Street banks have lithium slump call wrong

Sarah JonesMarkets Editor

Apr 5, 2024 – 11.44am

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The market’s bearish forecast of a chronic oversupply of lithium is wrong, according to one major fund manager which expects an emerging deficit in the green metal.

Ethical Partners’ proprietary model suggests the global market for lithium is moving “rapidly back” into balance and could even be undersupplied – at odds with the view of major investment banks including Goldman Sachs and Citi.

Pilbara Minerals’ lithium mine in Western Australia. The company has warned that a fall in lithium price means shareholders shouldn’t expect a dividend in the first half of the year. The New York Times

The price of battery metals collapsed last year – sending lithium down as much as 80 per cent from its peak – amid concerns of too much supply and weaker-than-expected demand for electric vehicles.

In turn, that has depressed the share prices of some of the largest miners in the sector, including Pilbara Minerals and Liontown Resources.

In the boom times, lithium carbonate rose from $US15,000 a tonne in 2021 to over $US80,000 a tonneas battery manufacturers rapidly stocked inventories to avoid even higher prices.