It's just bad news after bad news. I think Lithium could be...

It's just bad news after bad news. I think Lithium could be worth revisiting in a few years when the landscape is clearer. Until then there is major risk


http://www.copyright link/business/...thium-stocks-with-supply-talk-20180301-h0wv2v

Albemarle rattles lithium stocks with supply talk

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A lithium iron battery farm takes shape near Jamestown, South Australia. Neoen
by Jack Kaskey
Australia's skittish lithium investment community has been rattled again by fresh talk of increased lithium supply, this time from US major Albemarle.
In a bid to keep up with what it sees as surging demand for lithium, Albemarle said it would almost triple its capital spending this year to as much as $US900 million ($1.2 billion), up from $US318 million last year.
The company, which owns 49 per cent of the world's highest grade lithium mine at Greenbushes in Western Australia, also doubled its forecast for annual lithium demand growth through 2025, partly due to vehicle batteries that it expects will be 40 per cent more powerful.
For its bullish vibes, Albemarle was punished on US markets on Thursday morning Australian time, with its shares slumping by more than 8 per cent.

The trend extended to Australian lithium stocks on Thursday, where forecasts for an oversupply of lithium in the next three to four years have been fiercely debated and caused market volatility in recent weeks.



Those fears have been particularly focused on Chilean producer SQM's plans to ramp up lithium production aggressively over the next seven years, but the scheduled emergence of three new lithium-rich spodumene mines in WA this year has also raised concerns about too much supply too soon.
Several ASX listed lithium producers slipped by about 5 per cent on Thursday, including Galaxy Resources and Orocobre, which at $6.14 was fetching its lowest share price since mid-December.
Lithium aspirants like Tawana Resources and Altura Mining lost more than 2 per cent of their value on the day.
Pilbara Minerals, which earlier this week struck a major offtake and equity deal with Korean steel giant POSCO, emerged largely unscathed from the trading session, while Kidman Resources once again proved it is perhaps the most resilient lithium stock on the ASX, rising slightly.

"Massive new supply is rarely positive for prices," said Kevin McCarthy, an analyst at Vertical Research Partners.
"The bulls would argue this is a high-class problem, that the reason capital investment is so high is because demand is high."'
In a conference call to discuss fourth-quarter results, Albemarle chairman Luke Kissam pointed to the fast expansion of the electric-vehicle market to justify Albemarle's accelerated investment.
Mr Kissam predicted penetration of battery-powered vehicles will reach 12 per cent of the vehicle market by 2025, resulting in a global lithium market of more than 800,000 metric tons, a compound annual growth rate of about 18 per cent.

"We are now at the point where it is critical for us to accelerate our investment in additional capacity," Mr Kissam said.
Albemarle stressed that it would bring on the extra supply in increments, and did not expect its actions to negatively impact lithium prices.
One of the projects that Albemarle may accelerate is a beneficiation plant near the WA city of Bunbury, which would upgrade spodumene concentrate from Greenbushes into higher margin, battery grade lithium-hydroxide.
Albemarle's partner at Greenbushes, Chinese firm Tianqi, is also building its own lithium beneficiation plant south of Perth.

- with Peter Ker.