Originally posted by Dr_Manhattan
Mastermines has stuck his neck out on the sector turnaround.....
'I may live to regret it but I ‘m now calling the second round to begin around October this year. The reality of tight supply is likely mid-year, but media surrounding China incentives will likely trick the market momentarily.
This will push the realization we are entering another very significant cycle to late Q3 or Q4. It’s not fact, attempting to read the market ahead is just what we do. I also believe this one will last longer and build higher than the last, from early beginnings in Q3, 2018 right through to 2021. When it does happen, new mines will be funded, giving new supply and inevitably another price correction. I’m currently positioned for the next spike and I’m well prepared for it. That to me is what investing for maximum gain is all about.'
I distinctly remember him calling the temporary spodumene oversupply pretty accurately in a short exchange quite some time back. Logically, with the demand growth in EVs only picking up pace and Oct, Nov, Dec being the peak sales months, I'm inclined to agree.
Just as a relevant side, Chinese January EV sales in January were massive. Over 90K for traditionally the slowest month of the year in terms of sales.
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I distinctly remember him calling the temporary spodumene oversupply pretty accurately in a short exchange quite some time back.
I can imagine such an acceptance of the "oversupply myth" would have made him a pariah in these forums. Correct or not.
I was of the opinion that the lithium industry would bottom out in late 2019 but I have recently had to reevaluate that given the performance and rhetoric of ALB.
Throughout 2018 YOY QTR growth in both REV and GP was declining while inventories were climbing suggesting an oversupply situation with a continuation into late 2019 as the inventories peak and both revenues and gross profit went negative.
The issue is that while inventories have continued up both revenue and gross profit seem to have bottomed in Q3 2018. Given this and the more bullish tone of ALB from the latest QTR:
Outlook
Our 2018 performance and execution on our lithium growth projects have positioned Albemarle for anotheryear of growth in 2019. We expect net sales to range between $3.65 billion and $3.85 billion, representing growthof approximately 8% to 14%, with adjusted EBITDA between $1,070 million and $1,140 million, up approximately6% to 13%, and adjusted diluted earnings per share between $6.10 and $6.50, growth of approximately 11% to19%. Our growth will be driven by increased volume in our core lithium business, while our Bromine Specialtiesand Catalysts businesses will be stable. We are not forecasting any significant macroeconomic headwinds andhave not seen any decline in our customer demand forecasts.
It seems increasingly possible that Q3 2018 will be the bottom of the market and this would be confirmed if ALB pull another increase in YOY REV and GR in Q1 2019. Given the weight of Albermarle in the LIT.ETF, this will have a large impact on the entire sector. It is looking increasingly likely then that the re-rate in the lithium sector will occur this half not next.
ALB Inventories.
ALB Revenues.
ALB Gross Profit.
