Lithium

[JohnDe]

It doesn't matter what it truly is or isn't. The myth around lithium (whether you believe it or not) is that it is necessary for the green revolution, which virtually all Western governments have subscribed to and legislated targets for.

Too many people caught on the headlights of transition.

Technology is always moving forwards; we can try and stop it but the best we can do is slow it down.

The present technological transition has been in the pipework for over 50 years, the floodgates can't hold back the flow any longer.

Most people, like myself, don't buy an EV or solar panels for the environment. Just like people that keep updating their mobile phones and computers every year or two when there is nothing wrong with their existing model, it is because we love new technology and speed.

The only time I hear people talking about lithium and battery technology being bad for the environment is from people reluctant to follow and keep up with new technology.

People need to stop looking a few yars in front and behind, they need to start looking 20, 30, 40 years both ways. Most of the technology coming out was seen or invented decades ago, we just didn't have the means to make it economically and in large quantity.

In the 1990's, General Motors saw the change coming and prepared for it with the EV1. Sadly, they lost their nerve and scrapped their plan and possibly their future viability.

Tesla's original founding members also saw it, they used the EV1 motors to build their prototypes and sign on investors. With all the leaders of industry saying that Tesla would fail, instead Tesla is now the world's No.1 EV manufacturer.

I am reading about a 'green revolution', but what I see is a new technology revolution and revolution. We are witnessing the beginning of the death of old technology, and the people that still think it is new. The combustion engine has done the job it was designed for, but it is now competing against electric motors that are several times more efficient, less complex and cheaper to design and build.

Lithium is the choice because it is abundant, it is available all over the world, it is relatively easy to source and refine.

 

[noirua]

Lithium - electrive.com

www.electrive.com

 

[rcw1]

Good afternoon
Bell Potter lifting near-term lithium pricing outlook:

Allkem Ltd (AKE): Lithium price upgrades | Bell Potter

bellpotter.com.au

Traded LTR yesterday Edit ... silly me Friday..
Holding CXO hopefully not for much longer.

Kind regards
rcw1

Good afternoon
CXO made its highest SP




a 10.93% gain today, despite no price-sensitive news having been released, to rcw1 knowledge anyways (14/11/22).
Sold

Have a very nice day today.

Kind regards
rcw1

 

[Boggo]

 

[Sean K]

Having read all the news of the lithium stock pullback yesterday, I still don't know whether to believe the bears such as Goldman or the likes of Benchmark Minerals Intelligence who have produced two very different looking supply/demand graphs this year. I'm not sure which of these has an agenda, or who their analysts are, to be able to make a judgement either way. I'm vexed. And in that case, I thinking I'm better off just trading the charts of this sector for the time being.

 

[frugal.rock]

I still don't know whether to believe the bears such as Goldman or the likes of Benchmark Minerals Intelligence who have produced two very different looking supply/demand graphs this year.

GS are self serving.
BMI knows a bit more about the subject matter, imo. One would hope the IOSCO governance keeps them more flat-footed overall.
That doesn't mean totally ignore GS however. They are probably more concerned with "timing" the market to their benefit.

 

[waterbottle]

Lithium price hinges on China, as does iron price, until battery production moves West.

Commodity star lithium shows signs of cooling after 1,200% rally

Spot prices for lithium carbonate in China edged lower on Tuesday to register their first drop since June.

www.mining.com

 

[Sdajii]

Having read all the news of the lithium stock pullback yesterday, I still don't know whether to believe the bears such as Goldman or the likes of Benchmark Minerals Intelligence who have produced two very different looking supply/demand graphs this year. I'm not sure which of these has an agenda, or who their analysts are, to be able to make a judgement either way. I'm vexed. And in that case, I thinking I'm better off just trading the charts of this sector for the time being.

It's quite peculiar that there are still people unsure about whether or not to believe the likes of Goldman Sachs.

It's amazing how blatantly and publicly and repeatedly lies can be told, with blatant agendas, by the same people or groups, and still be believed.

I think we need a new version of "The Boy Who Cried Wolf", and not just for children. The plot needs to change a little and it should be from the perspective of the masses, not the boy. Rather than telling people not to lie in order to avoid not being trusted in the future, we need to teach people not to believe liars.

Of course, the current governments and corporations from big pharma to GS would oppose it every step of the way.

 

[Sean K]

GS not so bearish, but still see lower prices 2024.

 

[Sean K]

Current lithium producers will still be making a motza at these prices going into early 2023, even with a drop off in prices. If there's a major correction, junior explorers might find themselves in trouble if the overall price corrects sharply as supply meets demand in the coming couple of years, if that actually occurs. Perhaps China unlocking post-Covid will open up markets again and with cash sitting on the sidelines and price of e vehicles coming down perhaps there's an even greater race to battery cars and demand remains the driver.

 

[waterbottle]

I think there's too much unpredictability to be able to forecast prices that far out, namely:

1. Will China head into recession?
2. How many other EV manufacturers are coming online?
3. What happens if there's a commodity East-West divide?

 

[Sean K]

I think there's too much unpredictability to be able to forecast prices that far out, namely:

1. Will China head into recession?
2. How many other EV manufacturers are coming online?
3. What happens if there's a commodity East-West divide?

Agree. The big thinkers in the investment houses are making predictions based on assumptions that could be significantly disrupted by any one of a number of factors. It's all best guess work really. Probably why short term traders have an advantage by just playing the price action whereas medium-longer term investors are taking more of a punt.

 

[waterbottle]

Lithium players must be hurting today.
I found an interesting article suggesting China will set up a single purchaser for Lithium similar to what they've done with iron ore (although still ended up paying higher prices).

China may extend state iron ore buying strategy to lithium

If successful in iron ore, the mandate of China's new centralised state buyer could be extended to lithium, copper and bauxite.

www.mining.com

Short term is going to be volatile, with an increasing risk of recession it's hard to see EV purchases climbing rapidly.

All eyes on China

 

[Sean K]

Lithium players must be hurting today.
I found an interesting article suggesting China will set up a single purchaser for Lithium similar to what they've done with iron ore (although still ended up paying higher prices).

China may extend state iron ore buying strategy to lithium

If successful in iron ore, the mandate of China's new centralised state buyer could be extended to lithium, copper and bauxite.

www.mining.com

Short term is going to be volatile, with an increasing risk of recession it's hard to see EV purchases climbing rapidly.

All eyes on China

Yes; Covid, the China long lockdown, interest rate rises, recession, war, all conspiring to dampen demand for just about everything... Hopefully nothing to add to the list and we see a general change in fortunes some time in 2023.

 

[Sdajii]

Lithium players must be hurting today.
I found an interesting article suggesting China will set up a single purchaser for Lithium similar to what they've done with iron ore (although still ended up paying higher prices).

China may extend state iron ore buying strategy to lithium

If successful in iron ore, the mandate of China's new centralised state buyer could be extended to lithium, copper and bauxite.

www.mining.com

Short term is going to be volatile, with an increasing risk of recession it's hard to see EV purchases climbing rapidly.

All eyes on China

If you don't see EV purchases climbing rapidly, is that because you think people will stop buying cars entirely or because you think they'll revert to buying ICE vehicles?

EVs are still a small percentage of all new vehicle sales. Even if there is a drastic reduction in new vehicle sales (probably unlikely even in the event of a nasty recession), presumably the reduction in sales will primarily be from the ICE part of the market, not the EV side, which will continue to grow since it is still so small, and clearly everyone wants an EV.

 

[waterbottle]

If you don't see EV purchases climbing rapidly, is that because you think people will stop buying cars entirely or because you think they'll revert to buying ICE vehicles?

EVs are still a small percentage of all new vehicle sales. Even if there is a drastic reduction in new vehicle sales (probably unlikely even in the event of a nasty recession), presumably the reduction in sales will primarily be from the ICE part of the market, not the EV side, which will continue to grow since it is still so small, and clearly everyone wants an EV.

I don't know.

I think the equation was clearer when oil prices were at recent highs, but now oil is hitting pre-Ukraine war lows, and expected to fall further.

Coupled with a gloomy economy, would you buy a new electric car or would you buy a second hand ICE or maybe not buy anything at all?

I guess we should investigate what EV manufacturer sales have been like...

 

[Sdajii]

I don't know.

I think the equation was clearer when oil prices were at recent highs, but now oil is hitting pre-Ukraine war lows, and expected to fall further.

Coupled with a gloomy economy, would you buy a new electric car or would you buy a second hand ICE or maybe not buy anything at all?

I guess we should investigate what EV manufacturer sales have been like...

When buying a new car (a new car buyer typically does not have the same mindset as someone buying a second hand car) people are thinking ahead further than the current petrol price.

People buying new vehicles aren't scratching around for loose change, living hand to mouth. Buying a new car is a choice to spend more money than you need to.

Currently, the percentage of total new vehicles which are EVs is still very low. Demand far exceeds supply.

We have seen an interesting situation over the last two or three years with car manufacturing slowing down due to ridiculous lockdowns etc. The price of second hand vehicles has increased due to a lack of total vehicle supply. This will inevitably push demand for new vehicles up. It's still more cost effective to buy second hand, but more people will be keen to buy new when the price difference is more narrow.

Ask almost anyone if they would prefer an EV or a petrol vehicle. We all know what the majority will say.

Keep in mind that it is the people buying new vehicles (the ones with the most money) who determine what the people who buy second hand vehicles will have to choose from a few years down the track.

I can't see how the number of new EV sales could not continue increasing rapidly for the next few years, short of all out catastrophe well beyond what most currently-living people have seen in their lifetimes (probably not as unlikely as many of us would like to think, but in that scenario you probably want to be investing in canned food, guns, ammo and survival courses).

 

[waterbottle]

When buying a new car (a new car buyer typically does not have the same mindset as someone buying a second hand car) people are thinking ahead further than the current petrol price.

People buying new vehicles aren't scratching around for loose change, living hand to mouth. Buying a new car is a choice to spend more money than you need to.

Currently, the percentage of total new vehicles which are EVs is still very low. Demand far exceeds supply.

We have seen an interesting situation over the last two or three years with car manufacturing slowing down due to ridiculous lockdowns etc. The price of second hand vehicles has increased due to a lack of total vehicle supply. This will inevitably push demand for new vehicles up. It's still more cost effective to buy second hand, but more people will be keen to buy new when the price difference is more narrow.

Ask almost anyone if they would prefer an EV or a petrol vehicle. We all know what the majority will say.

Keep in mind that it is the people buying new vehicles (the ones with the most money) who determine what the people who buy second hand vehicles will have to choose from a few years down the track.

I can't see how the number of new EV sales could not continue increasing rapidly for the next few years, short of all out catastrophe well beyond what most currently-living people have seen in their lifetimes (probably not as unlikely as many of us would like to think, but in that scenario you probably want to be investing in canned food, guns, ammo and survival courses).

I don't think that's right - every purchase is a cost-benefit equation. A small difference in price matters when other expenses exist, namely mortgages, and I think that consumers factor this in when deciding between EVs and ICEs, particularly when he price of second hand vehicles (and fuel) is now falling.

Having said that, I do think long-term demand will increase. Governments have legislated a baseline level of demand. There is a global trend towards electrification. There is a Western trend to renewable energies which will require a storage solution too.
I think there is also going to be demand for mines from car companies (see Musk's comments)

The difficulty is what happens in the short term, which I think will be dictated by consumer trends, China and the overall economy....

 

[Sdajii]

I don't think that's right - every purchase is a cost-benefit equation. A small difference in price matters when other expenses exist, namely mortgages, and I think that consumers factor this in when deciding between EVs and ICEs, particularly when he price of second hand vehicles (and fuel) is now falling.

Having said that, I do think long-term demand will increase. Governments have legislated a baseline level of demand. There is a global trend towards electrification. There is a Western trend to renewable energies which will require a storage solution too.
I think there is also going to be demand for mines from car companies (see Musk's comments)

The difficulty is what happens in the short term, which I think will be dictated by consumer trends, China and the overall economy....

Once electric vehicles make up a significant proportion of all new vehicle sales, sure, price discretion will be a bigger issue, but for the next few years we could see new EV sales continue to increase even if it was only the most wealthy few percent of the population buying them. Only a very small percentage of the population buys a new vehicle each year, plenty of people never buy one in their whole lives. I will most likely never buy a new car (Why pay a few thousand dollars to drive it out of the dealership when I can pay thousands of dollars less just because someone else drove it out of the dealership?). You're only buying a new car because you want to spend extra money for the privilege of having a virgin car, you're already choosing to spend more money than you need to, so why not buy what you want? And as I said, what the majority of people now want is an electric car, even if it's not quite as cost effective. We even have a poll here on this forum showing that, not that we need it. We literally know that the consumer is literally willing to pay more for the privilege of driving an electric car, even if it is about stupid virtue signaling or to kid one's self into thinking that they're helping the world.

We have ample evidence that the majority of people want an EV even if it will cost them more, most people are being lead to believe that in the long run it will be cheaper even if it won't, and currently the percentage of new vehicle sales which are EVs is low, so you would only need a very small percentage of the population to choose EVs for the number of EV sales to increase for the next few years. If half of all new vehicle sales were already EVs, sure, things might be different (but even then, any downturn in total new vehicle sales would mostly be deducted from ICE vehicles, not EV sales).

Saying long term demand will increase is pretty redundant at this point; mandates for phasing out petrol vehicles take this out of the choice of motorists anyway. Sure, the rush to renewable (unreliable) electricity sources will force the use of large scale electricity storage, which will increase demand on lithium. We're definitely setting ourselves up for a huge surge in electricity prices by phasing out our cheapest and most reliable sources and replacing them with more expensive and less reliable sources, while simultaneously increasing our demand for electricity! Private vehicles will be out of reach for an increasing percentage of the population in the not too distant future, but most people won't wake up to that reality within the next 10 years.

Looking at the trend on new EV sales, and considering the very low percentage of the total market this still represents, and that the number of people required to fuel this is very small and that there is still a much greater percentage of people with more money than they need, and the number of people who believe that buying an EV will 'save the planet' and increase their social status, and the fact that you literally need to book way ahead to buy an EV and sales are already booked way ahead with deposits already paid... it doesn't make much sense to say total EV sales are going to drop any time in the next 2-3 years and I would argue 5+ years conservatively.

 

[rcw1]

Good morning,

The Motley Fool has published an article on 26/12/22 about five ASX lithium stocks which have been recently rated as buys and tipped to climb meaningfully higher in 2023:

AKE; CXO; LTR; MIN; and PLS

Not holding, have traded all these stocks in 2022 particularly LTR and anticipate will continue to do so in 2023 all going well.
Kindly conduct your own due diligence.

5 ASX lithium stocks to buy in 2023: brokers

Here's why leading brokers are tipping these ASX lithium stocks to outperform in 2023...

www.fool.com.au

Resources and Energy Quarterly December 2022 pp146-147 has explained some key facts concerning Lithium and world demand:

Spodumene prices are estimated to rise from an average of US$598 a tonne in 2021 to US$2,700 a tonne in 2022, and US$4,010 a tonne in
2023 before moderating to US$3,130 in 2024. Lithium hydroxide prices are expected to lift from US$17,370 a tonne in 2021 to US$39,900 in2022 and US$61,200 in 2023, moderating to US$48,500 by 2024. Australia’s lithium production is forecast to grow from 335,000 tonnes of lithium carbonate equivalent (LCE) in 2021–22 to 399,000 tonnes in 2022–23 and 470,000 tonnes of LCE in 2023–24.

In 2022–23 Australia’s export earnings are forecast to more than triple — from $4.9 billion in 2021–22 to $16.1 billion, and $17.0 billion in
2023–24.

World demand
Chinese electric vehicle sales remain strong. Rising demand for electric vehicle batteries saw global lithium demand continue to grow strongly in the September quarter 2022. Despite a weakening in global economic conditions, sales and production of electric vehicles (EVs) continued their rapid growth trend. Global sales of all types of EVs increased 40% in the nine months to September 2022 compared
with the same period in 2021 — with Chinese sales up 110%, European sales up 6%, and North American sales up 27%.

Fallout from the Russian invasion of Ukraine and the resulting higher power prices and factory shutdowns saw European sales slow in July and August, before picking up in September. While US EV sales have continued to grow, the North American market remains relatively small. In China, total monthly EV sales reached over three-quarters of a million for the first time in September. Auto production and supply chains in China have recovered from the COVID-19s lockdowns that disrupted industrial output in the June quarter 2022.

Tax incentives and government subsidies continue to support purchases of new energy vehicles, and a number of local governments — such as Shenzhen, Shandong, and Hubei — have also provided subsidies and incentives to encourage EV purchases.

Policies to promote EV uptake have also been implemented in many countries. In the United States, the Inflation Reduction Act of 2022 (with funding of US$391 billion) contains provisions to promote the clean energy transition including significant incentives to purchase EVs.

Global passenger EV sales are expected to continue to grow strongly, albeit at a slower rate than in 2021 — when passenger EV sales more
than doubled to an estimated 6.8 million vehicles. Passenger EV sales are expected to reach over 14 million in 2023. Major global automakers continue to accelerate plans to transition to EVs by developing new product lines and converting existing manufacturing capacity. The global market share for passenger EVs has quadrupled since 2019, with EV sales representing about 9% of the car market in 2021. Strong underlying demand and EV manufacturers’ declarations of further increases in production, imply that EV sales could
reach almost 40% of annual vehicle sales by 2030.

World demand for lithium is estimated to increase from 592,000 tonnes of lithium carbonate equivalent (LCE) in 2021 to 745,000 tonnes in 2022. Over the following two years, demand is forecast to rise by over 40%, reaching 1,091,000 tonnes by 2024. Despite the spread of new battery manufacturing capacity into Europe and the US, Asia remains the major source of demand for lithium.

In September, the Chinese government announced a continuation of vehicle purchase tax exemptions for new energy vehicles through to the end of 2023. The 12 month extension is expected to cost around 100 billion yuan. Compared to a similarly priced internal combustion
engine (ICE) passenger car model, Chinese government subsidies provide a saving to customers of about 10,000 yuan.

Have a very nice day, today.

Kind regards
rcw1