Dale Henderson, who Pilbara revealed Wednesday afternoon would replace Ken Brinsden as CEO on July 30, said he was surprised by stock moves due to a lack of changes in spot lithium prices, but it looked like the runner’s notes had “surprised the horses.”
“It’s a pretty bold call to say that the peak has occurred and that the downward trend will begin during this calendar year,” he told The Australian Financial Review.
Henderson said the short-term outlook remained “very positive,” noting that the company last week hit a record price for a load of espodumene sold through its auction platform.
“That was just a week ago and there were groups claiming this product, so we see this strong demand. And I notice in the Goldman report that they support strong demand. [too]but what they suggest is that there is a great deal on foot, “he said.
Underinvestment in raw materials
“Of course this offer is coming, the question is when. Will there be any, but will it really tip the scales in the short term?
“There has been a long period of underinvestment on the supply side of commodities and … obviously the groups are moving forward now, but there is a long period of gestation, so in the short term we believe the prospects are quite positive “.
Goldman, on the other hand, warned that the rise in lithium prices over the past two years had spurred a “disproportionate supply response well ahead of the trend in demand”, praising a “strong correction” in lithium prices in the next two years. Lithium prices vary by geography, grade and shape, but the investment bank predicted that lithium carbonate would drop from about $ 60,000 per tonne to $ 16,372 per tonne in 2023.
Daniel Jiménez, director of Galan Lithium who is also a partner at lithium consultancy iLiMarkets, agreed that equity investors had been baffled by broker notes and other headlines, but were underestimating demand and overestimating supply .
“I think Goldman Sachs is totally wrong,” he said.
Jimenez said waiting times for electric vehicles in Europe had reached 24 months, showing that “real” demand was “significantly higher” today than car sales suggest, and that more lithium would be needed. , rather than less than expected.
Global demand for lithium carbonate equivalents is expected to rise from 500,000 tonnes last year to 1.4 million in 2025, above Goldman’s forecast.
Regarding the offer, Jiménez said that new projects that were not known today were unlikely to go online and that it was difficult for people “who have not been in the industry” to assess the challenge of expanding projects. lithium or build new ones.
Former Chilean producer SQM’s former executive said the addition of original electric vehicle equipment manufacturers, or OEMs, had more ambitious plans and required more lithium than forecasters expected, while supply tended to be overestimated. -se.
“Unless something really catastrophic happens in the world, a third world war or an economic crash, I think it’s very unlikely that we’ll see a market where lithium isn’t short for the next five years,” Jimenez said.
Argonaut analyst George Ross said he was also skeptical that the supply of lithium that would reach the market would arrive “as soon as predicted,” noting many technical challenges in launching the espodumene operations and brine.
However, he acknowledged that lithium stocks still appeared to be “over-inflation” after the accumulated market capitalization reached $ 48 billion this year, more than less than $ 1 billion in 2015.
Following the fall in Pilbara’s share price, Macquarie analysts said the market was putting a flat price of lithium carbonate at $ 13,000 per tonne, 80 percent below spot prices in China, or espodumene at $ 950 per tonne, 85 percent below the insured price at its recent auction.
Henderson, who joined Pilbara in 2017 before the two-year bearish market of the lithium market, said it was “very hard to imagine” that lithium prices would return to those dark days, and would like to do another one. auction as soon as possible … for obvious reasons ”.
“The demand side of the equation is structurally different,” he said. “It seems that lithium has gone from this very speculative type of commodity at the time to what is recognized as a key ingredient for the future.”
Macquarie analysts slightly lowered their electric vehicle sales forecasts for 2022 this week, but still expect growth of 43% over last year to 9.5 million vehicles, and said any drop of lithium and cobalt prices could be “temporary once China recovers.”