I'm referencing a webinar by SC Insights from a couple of weeks...

I'm referencing a webinar by SC Insights from a couple of weeks ago. Like lots of "pundits" they have opinions on the price of lithium and why it has crashed and what's in store. Some of the snippets (my bolding)

"Now the big worry is that if prices do fall towards $10,000/t level, you're going to be in a world of hurt and it's going to cause the mother of all lithium price spikes and the mother of all lithium shortages - which will have a serious structural problem to the market - not just in the short term but in the long term."

Short term gyrations but grave concerns for the long term market structure...

"Our long-term price forecast - incentive price forecast for good quality assets - is sort of mid to low 20s at the moment on a carbonate basis, but certainly, for a lot of assets they will need a lot more than that going forward."

Now just to be clear, "incentive price" is an economic term ... and you have to good back to those pesky supply and demand curves I posted about earlier ... you'll see it in action. You've seen when demand is high (or supply is low) price will increase. Conversely when demand is low (or supply is high) price will increase. But we seem too have demand high, supply high and price low ... and that just doesn't really work in a "normal market". What's happening here???

SCI put this slide out...

First note that they are representing a bifurcated market .... namely China and ex-China ... with this comment
"It’s important to understand that the market inside of China - which is the majority of the market - operates very differently in terms of contract structures to the market outside of China ... price is almost all determined by what happens in China - the rest of the market is basically a price taker"

and this very important point about the 2 main supply chains Ex-China (North America and EU)
"If you're developing those two supply chains and especially if you're thinking about protecting yourself in terms of price to create enough margins for the industry to be attractive - the Western industry to be attractive – it cannot be based on Chinese levels and especially dynamics."

Well that's what PLL is doing ... participating in the development of a supply chain in North America ... but basically handcuffed by CIF pricing until it gets through to the consumers (i.e. Refiners, CAM and Auto OEMs) that Chinese pricing and market dynamics will break the Western Auto Industry.

Their view on short term price... and if you don't know when Chinese New Year is ... Feb 10 - Feb 24

"The market is negative because the cathode supplies still have too much capacity, the cell suppliers still have too much capacity - they will do for years to come - but there is that tightness, and even though the market's in surplus, you still have a stocking and destocking cycle. It's our view that, if it hasn't started already, in the next couple of weeks you will have to see a lot more purchasing from the Chinese industry. Obviously, that may be delayed a little bit by Chinese New Year, but those stock levels can't remain at that level and it's also worth mentioning that, that one week level for those generally non-integrated refineries - that's longer than it takes to ship material from Australia or Brazil. So again, that could lead to a tightening of the market. You're not going to see prices explode off the back of that because there is still this surplus of material that can be bought - but we would expect inquiries to pick up and we would expect prices to stabilize and most likely increase as well, which may sort of stop the rot in some of the other markets."

So then, Feb/Mar is shaping up to get very interesting wrt "price".
"... keeping an eye on what happens in China - keeping an eye on that restocking - that's where I think in the short term can be relatively bullish, and if we're not, it's going to lead to a world of hurt for Lithia in the future. Potentially an investment opportunity, but keep an eye out."

If you really want some further reading on "Incentive Price" this was pretty good ... from July 2023 .... It has a very low level of "incentive price" (remember this is the price that is supposed to be the level at which a producer is incentivized to produce more).
https://www.optarcapital.com/wp-content/uploads/2023/07/2023-07-Lithium-Price-Reversion-Risk-0.pdf