Weakness in lithium stocks, like Albemarle (ALB) may only be temporary.
One of the key reasons the stock fell was because Goldman Sachs says supply and demand should balance out by next year. That’s not likely to happen, though. Also, Goldman Sachs made a similar call earlier this year, as well. They were proven wrong with that call, and they’ll be proven wrong again with this latest call.
Lithium prices are only set to soar with supply-demand issues.
Automakers are scrambling for supply. And firms, such as Trafigura say lithium “demand will hit 800,000 tons of lithium carbonate equivalent this year — overshooting supply by 140,000 tons — and sees demand rising by a further 200,000 to 250,000 tons annually through 2025.”
And, according to Sociedad Quimica y Minera’s Commercial Vice President, Lithium, says “The market needs about 200 to 300,000 tonnes of lithium every year (to meet demand) and that means that you need roughly 8 to 10 new projects coming on stream every year.”
Again, with significant demand and little supply, prices won’t come down soon.