The global lithium metal market is showing a significant rebound from its bottom, with stock prices of related companies in the supply chain posting strong gains. By the close of trading on Monday, Albemarle (ALB.US) saw its share price rise by 4.98%, while Lithium Argentina AG (LAR.US) surged 7.31%, both hitting multi-year highs. This follows the Bank of Nova Scotia's decision to upgrade both lithium producers from "Sector Perform" to "Sector Outperform," setting price targets of $200 and $7.75, respectively. Concurrently, the bank also adjusted Sociedad Química y Minera de Chile (SQM.US) to the same rating level, emphasizing in its report that the current lithium price increase is "only the first wave of a multi-year supply tight cycle." Scotiabank analyst Ben Isaacson pointed out that the majority of the bank's modeled lithium market supply and demand scenarios point to a medium-term tightening trend—even if electric vehicle demand growth is slightly below expectations, or Battery Energy Storage System (BESS) development falls short, the factors supporting the market inflection point remain robust. He further projected that total lithium demand will reach 2.8 million tonnes by 2030, with a pessimistic to optimistic demand range of 2.5 to 3.2 million tonnes. Under the base case scenario, the compound annual growth rate for lithium demand over the next five years is approximately 14%, ranging from 12% to 17%. Isaacson noted that market concerns regarding Albemarle's balance sheet are gradually subsiding—the company has optimized its leverage ratio for the fourth consecutive quarter and is simultaneously reducing both operating expenses and capital expenditures. It is projected to achieve positive free cash flow of $300-400 million by the end of 2025. As visibility on the industry inflection point continues to improve, coupled with the ongoing progress of the company's self-help measures, its share price is poised for significant appreciation. "We anticipate substantial upward revisions to mid-2026 earnings, as data-driven confidence in lithium market tightening strengthens," he added, noting that for many generalist North American investors, Albemarle is "the only viable large-cap stock to express a view on lithium." Regarding Lithium Argentina, Isaacson highlighted that the Caucharí-Olaroz project produced 34,100 tonnes of lithium carbonate for the full year, meeting guidance with an operational rate of 85%. Cash operating costs have fallen below $6,000 per tonne, enabling the business to generate positive free cash flow at any stage of the industry cycle. The company's financial health is continuously improving—net debt is expected to decrease by $26 million in the fourth quarter, with available liquidity exceeding $150 million. Furthermore, the promotion of Ale Miker to President was described as "excellent," showcasing the company's deep talent pool and confidence in its strategic development. The analyst maintained a "Sector Perform" rating on Lithium Americas (LAC.US), while other peers received higher ratings. The core rationale is that the company currently has no lithium production operations or revenue streams, a situation unlikely to change for several years—even a substantial rise in lithium prices would not benefit Lithium Americas. The analyst reinforced this assessment with a pointed rhetorical question: "If lithium prices surge over the next two years and the company cannot participate, what justification is there for a Sector Outperform rating?"
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