I am sure your maths on the potential demands are sound but future operates on a sliding scale like a piece of rubber. If you will recall in another sector at a historical time, your sentiment were reflective of the maths numbers back then on the steel demand with 1 Perth City being built every week in China! A lot of juniors started off with euphoria because when IOP rallied, there was no shortage of stories and ore bodies just waiting for that mechanical shovel. From memory,
just to name a few I was aware of with great resource, some just waiting for infrastructure etc. Others were taken over as the IOP fluctuate up and then down. On the list of juniors, only 2 remained (survivors) and the rest perished while FF to now, IOP continued on that trajectory. Chinese insatiable appetite for IO remain strong.
Out of the current crop of Li producers generally speaking, only MIN and Greenbushes are able to withstand the bashing either through solid superior geology or just diversification. Tony's tweet is self explanatory of what happens when a bubble burst. Who knows out of the current crop of producers will survive but the consensus of over supply will last from 1-2 to 3-4 years which is a hell of a long time.
When I look LT, of course I can see the future but will the current crop of producers remain intact ? On top of this, we have a sliding macro on world growth which IMO is the most important condition to maintain a healthy enthusiasm in EV bearing in mind you pay a premium for exotic privilege that is outside of common ownership. again, just like roof solar, it exists only because of subsidy. anyone looking to purchase roof solar currently? Notice the cost has dropped massively since Govt removed the subsidy? Can you see the same thing with Chinese EV when the Govt 'tweaked' the subsidy? I dont look that closely at new car sales but again I was shocked to learn that ICE new car sales in China have gone backward in 2019 to date. You can't tell me that the dropped in ICE sales were picked up in equal number from EV.
Going forward as BaBa Roga intimated, the supply is there and ramping up, if the shortage of demand persist the only thing giving is the price of the commodity in the various forms. Currently the opportunity exist to play hard and bet that the company of choice will survive the down turn or lighten the load if already 'all in'. I am not seeing any triggers for EV takeup but should the global growth changes direction, I suspect Chinese will continue to expand this EV market.
PLS Price at posting:
35.0¢ Sentiment: None Disclosure: Not Held
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