All lithium chemicals have now turned green, both hydroxide and carbonate.
We thought this lift in pricing may come after the return from Chinese New Year holidays, but it seems to be happening now, with the smarter refiners in China seemingly trying to get ahead of the curve
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This signals to me that the CAM plants are at the beginning of their re-stocking cycle. They have sold all their product and have now started buying again to keep those cathode chemistries required by each battery manufacturer. This in turn means that downstream, battery manufactureres are either starting to increase production, or have also run out of CAM material to make their batteries. This ramping effect will through from the batery manufacturers, to the CAM plants, to the hydroxide/ carbonate refineries and all the way back upstream the raw ore and spodumener. This of course is being driven by steady gowth in EV sales and the explosion in commercial and home storage.
So, we may be seeing the very early infancy of the next price cycle.
There has been debate whether this will be a steady increase to sustainable levels, or another spike, which surpasses the last. There is merit to both arguments, as the lithium market is now more mature and should recognise this price spiral behaviour and dilute the panic buying which saw such incredible lithium prices during the end of the last cycle.
The counter to this is that the refiners, CAM plants and Battery manufacturers have let stocks dwindle to the point that there will again be panic buying and push the price to record high levels....that the market has NOT learnt its lesson.
If indeed the refiners, CAM producers and battery plants were trying to push the miners to the brink of failure, they have definitely succeeded.
But is it a flawed strategy?
Have they inadvertently now created what may be a perfect storm for the resurrection of the lithium price?
With IRA credits at point of sale, and the widely tipped beginning of the interest rate cut cycle, we may see a boom in spending, with EV's being on the shopping list.
And with new models frequently on the market and a plethora of affordable models on the horizon through 2024, 2025 and 2026, EV sales will continue to grow and possibly go vertical on S curve.
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And with miners being put under extreme pressure leading to production cuts, care and maintenance, funding issues, bankruptcy, long ramp ups and many projects delayed and scaled back, where will the raw materials come from, to support this next boom?
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