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Lithium bears come out to play – again

Small Caps2023-04-05

Lithium and other battery metals are the hottest sector of Australian resources and will likely remain that way for years, but it is likely to remain a rollercoaster until the market matures. ...

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Multisack bagger
·2023-04-05
Lithium is long term bullish despite the sentiment
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Deonc
·2023-04-05
ok
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Caps</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Lithium and other battery metals are the hottest sector of Australian resources and will likely remain that way for years, but it is likely to remain a rollercoaster until the market matures.\n...</p>\n\n<a href=\"https://smallcaps.com.au/lithium-bears-come-out-to-play-again/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4533","symbol_name":"AQR资本管理(全球第二大对冲基金)","start_time":0,"source_url":"https://smallcaps.com.au/lithium-bears-come-out-to-play-again/","article_id":"2325133636","we_media_id":null,"thumbnails":["https://smallcaps.com.au/wp-content/uploads/2023/04/Lithium-bears-stocks-511x400.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2325133636","pubTimestamp":1680684705,"sourceInfo":{"source_id":"smallcap_stock","name":"Small Caps"},"weMediaInfo":null,"summary":"Lithium and other battery metals are the hottest 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other battery metals are the hottest sector of Australian resources and will likely remain that way for years, but it is likely to remain a rollercoaster until the market matures.\nAlbemarle’s $5.5 billion takeover bid for Liontown Resources (ASX: LTR) has refreshed interest in lithium stocks, but in the background there are unmistakable rumblings which indicate the price of the leading battery metal has further to fall.\nThe latest warnings are easy to dismiss because we’ve been down this road before only to discover that the threats of a lithium price crash were a false alarm.\nIn fact, it was more than that because anyone who sold their lithium shares after top investment bank Goldman Sachs told clients in June last year that “the battery metal bull market is over” missed the final surge to the peak which only came in November.\n\n\nPilbara Minerals (ASX: PLS), for example, rocketed up from $2.13 in the days after the Goldman Sachs comments, to an all-time high of $5.66 in early November.\nSoundly criticised at the time by lithium company managers and specialist commodity research firms such as Benchmark Mineral Intelligence, it turned out that Goldman Sachs had only committed the blooper of being six months early.\nAfter the November lithium price surge to a record US$87,000 a tonne in its carbonate form, the metal has crashed back to US$35,000/t, which is still handsomely profitable even if the direction of the price is a worry.\nLithium miners on the short sell list\nHistory could be repeating because Goldman Sachs is at it again, and this time it has the backing of another US bank, Citi, and a surprising number of Australian investors who are short-selling local lithium stocks.\nAccording to the latest analysis by the Shortman.com.au website, which tracks stocks being sold short by traders who sell in the belief that will be able to buy back later after the price falls, five of the top 20 short sold stocks on the ASX are lithium producers and explorers.\nTop of the lithium short list is Core Lithium (ASX: CXO) which has 9.99% of its shares shorted.\nLiontown has 9.08% shorted (presumably deals executed before the Albemarle bid), Sayona Mining (ASX: SYA) is 8.5% shorted, Vulcan Energy Resources (ASX: VUL) 6.64%, and Lake Resources (ASX: LKE) 6.1%.\nWhat makes the latest attack on lithium particularly newsworthy is that it has arrived just as two other big events occurred in the lithium market,\nFirst came the bombshell takeover bid for Liontown which boosted the share prices of all companies exposed to lithium.\nBullish lithium forecast\nThen came the arrival of the Australian Government at the lithium party with a bullish report, albeit one that only looked at the value of exports and not profits – and that’s a critical point.\nThe government report, in the latest edition of the Resources and Energy Quarterly from the Department of Industry, claims that the total value of Australian lithium will rival thermal (electricity producing) coal by the year 2028 when both will export material worth A$19 billion.\nThat forecast is as much a political statement as a comment on the rising value of lithium because it implies a spectacular fall in the value of coal exports which are tipped to plunge by 70% from their current level of $65 billion a year.\nGiven what happened with coal over the past two years, including a record price of US$450/t (A$750/t) in September last year, the department’s coal forecast could prove to be overly negative, while its lithium forecast could be too enthusiastic.\nGoldman Sachs tips large lithium price falls\nIt’s into this heady brew of positive and negative tipping that Goldman Sachs has returned with its latest lithium wake up call, delivered without words but in the form of price tables and graphs.\nIn the latest edition of its lithium data report titled Australian Lithium Coverage, Goldman Sachs is forecasting a 79% fall in the average carbonate price from US$53,300/t this year to US$11,000/t next year, where it could stay in 2025.\nSpodumene, lithium ore in a part processed form containing about 6% metal, could also plunge next year according to Goldman Sachs – down 81% from this year’s average price of US$4,330/t to US$800/t.\nIf there was a prize for the biggest bear in the lithium market Goldman Sachs would be a clear winner, and while its latest negative price observations will be soundly criticised, just as they were last year, it was the bank which had the last laugh in 2022.\nCiti’s forecast\nGoldman Sachs could be wrong again, but it would be a wise investor to remember that it was only wrong by being early with its forecast that the lithium bull market is over.\nCiti, in a note to clients on Monday, asked a question in the headline of its report: “Lithium (still) in freefall, when will it stop?”\n“Carbonate prices breached our three-month price (tip) of US$40,000/t, and we see prices remaining under pressure in the near term as supply chains continue to destock accumulated inventory,” Citi said.\n“We expect support for battery grade carbonate prices around US$25,000/t as most non-integrated chemical producers should be loss making at those levels.\n“An expected restocking of the battery supply chain into the latter half of the June quarter may help prices stabilised and position lithium for a fresh rally.”\nFor investors with a taste for lithium the latest short selling data, plus the negative views of big-name banks such as Goldman Sachs and Citi is undoubtedly food for thought.\nBut offsetting the negative information are three critical points.\nFirstly, all commodity markets in the early stages of a revolution (and the electric vehicle rush is a revolution) go through the same gyrations of rapid rises and rapid falls as producers and consumers seek a form of equilibrium which only comes when the market develops depth.\nSecondly, what happened last year could well be repeated this year with Citi’s comments about stocking and destocking in the lithium supply chain a guide to the market being in deficit one month and surplus the next – until a point of balance is reached.\nLithium and other battery metals are the hottest sector of Australian resources and will likely remain that way for years, but it will not be one-way traffic and there will be stocks that over-promise and under-deliver.\n\n \n\n\n\n\n\n\n\n\n\n\n\nJoin Small Caps News\nGet notified of the latest news, interviews and stock alerts.\n\nΔ","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9948854527,"gmtCreate":1680681432369,"gmtModify":1680682164282,"author":{"id":"4129610444163112","authorId":"4129610444163112","name":"Multisack 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