What is happening with Orocobre stock price ?
It is holding up at a support level of around 2.80 to 3.00 in the face of a prolonged short selling phase.
Short trades have comprised 56% of all trades in the last 20 days - a very large percentage.
Given that the aggregate short position is hovering around 20% of all issued stock, you could reasonably assume that there will soon be a point at which the stock available for shorting dries up -- with the excess supply of stock gone where will the natural supply/demand balance take the share price?
is this the impact of the burst of the JUNIORs lithium bubble, or something more specific to the company ?
Define JUNIOR. Compared to an exploration company with a few tenements and a handful of holes in the ground, ORE are a giant. No doubt there is a growing realisation in the market that whilst there is still plenty of space for new producers, only a small number of the explorers will progress to become producers. ORE are one of a small number of lithium producers and that sets them apart from the aspirants in the ranks of the explorers.
Compared to the Big 3, which became the Big 5, ORE are not insignificant in respect of their LCE output - how long, with the emergence of ORE, GXY, and others, will it be before the "Big
x" terminology disappears. With growing balance sheet strength and expansion plans, "junior" feels like a label that ORE will soon be able shake off.
But as a junior producer that is emerging from its ramp up phase, ORE's sp is vunerable to perceptions around requirements for capital, their ability to deliver nameplate production, quality of production, etc, etc, etc. Any hiccup such as the recent flat guidance downgrade sets the scene for a short sell phase as we are currently seeing.
Good news, as we are beginning to see on a regular basis, has the opposite effect and has arrested the slide. I'm expecting the quarterly to reinforce the improving balance sheet, a reiteration of no capital raise for expansion, a progress report on the rebalancing of pond inventories, and a positive progress report on the performance of the purification circuit with the new hydrocyclones, and an update on phase 2 and the LiOH plans. It should make for good reading...
Also, do you think the ambitious big lithium boys expansion plans (in chile, in argentina, in australia with Greenbushes...) etc could have a negative impact on lithium prices in 2019 and beyond ?
Which will grow faster - supply or demand. I'll back the demand story all the way.
Actually, you could do worse than read Joe Lowry's
lastest linkedin piece. While we are all wary of his public service pronouncements on certain market participants, ORE included, his general market commentary is ok. His view on demand is conservative and he has supply staying just barely ahead of demand.
