Lithium prices keep rising, therefore it's a shame the broader market sell-off didn't allow us to breach $4 p/s on the back of said lithium price increases.
US markets have closed decently in the green, so hopefully the bottom is in for a while, or is it a DCB. Wrt lithium prices and thus the PLS share price, I reckon we have a 4 to 6 month window to run back up and breach $4, dependent on how soon Mr/Mrs market want's to put on the forward looking goggles, wrt new supply coming online late this CY.
As posted a week or so back, I am a little cautious wrt how sustainable current lithium prices are atm. Please understand, I'm not suggesting there will be an oversupply situation, in fact the supply gap created from 2019 through 2021 will be difficult to fill this decade (perpetual deficit) for all the known reasons.
But, there are many posts on here referencing said perpetual deficit, and thus implying prices will keep heading north. That IMO is probably true for the H1 2022CY, however said supply gap narrows when new supply comes online later in the year and into 2023 CY, easing the tightness in the market, which once again will blow the froth off the top of lithium prices.
Once again, not an oversupply situation at all, as said supply gap, coupled with high demand has significantly lifted to base-line on prices likely for rest of the decade. As an example, 2 years back, credible analysts/talking heads were stating long term prices for carbonate and hydroxide would eventually average $12k to $14k pt respectively. However, those same analysts, along with everyone else could/did not estimated the speed at which the demand profile accelerated, spurred on by covid. Therefore they are now stating prices might average $18k to $20k pt for this decade, but initially prices could shoot to the $70k pt before slowly trending down as incremental new supply reaches the market.
EV and storage deployment will be constrained by the lack of available lithium units and other battery metals, but you cant have your cake and eat it too, meaning, rising lithium prices are currently driving the share price higher, so when market tightness eases and prices start to cool and trend down, the share price will react accordingly. Akin to oil prices driving oil producer share prices, so what happens when OPEC announces production expansion.
The pent up demand will keep the market tight, but as said y-o-y growth for end product will be constrained regardless of OEM ambitious announcements, hope, etc.
Just the way I view the supply/demand funnymentals, AIMO, not Advice, please DYOR and hope I'm wrong....
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