keywords :
The world's largest lithium producers say
they remain bullish on long-term demand for the battery material in the midst
of recent price drops fueled by growing worries that the global pace of
electric vehicle adoption is slowing.
LG Energy Solution, General Motors, Honda
and other auto and battery makers have trimmed EV expansion plans in recent
weeks, partly due to rising interest rates, which in turn has stoked concerns
of a supply glut for the battery metal.
A basket of prices for lithium - which vary
by region and by type - tracked by Benchmark Mineral Intelligence has dropped
more than 60% this year.
While demand for the ultralight battery
metal is still expected to rise this year from 2022 levels, investors'
expectations for white-hot industry growth were dampened by sluggish quarterly
reports from Albemarle, Pilbara Minerals, Livent and others.
In Australia, the world's largest
lithium-producing nation, Pilbara Minerals is the most-shorted stock on the
Australian Stock Exchange, suggesting investors have a negative view on lithium
demand.
The bearish sentiment has affected more
than just lithium producers. Lithium Royalty Corp, a lithium investor, has lost
more than 37% of its value since listing in Toronto earlier this year. The
Global X Lithium & Battery Tech has dropped 18% this year.
Chris Berry, an independent lithium analyst
and consultant, advises clients to focus on a range of prices for the key
battery metal, not just spot, adding that prices today remain far above
historical trends.
"While the spot price has cratered, I
haven't seen an evaporating of demand which would validate the trajectory of
the spot price," Berry said.
In calls with investors and analysts in
recent days, lithium producers said they saw the market volatility as short
term, adding that they expect electrification to keep growing.
"We see what's happening now as road
bumps, but certainly not a determinant for the long-term growth we have,"
Eric Norris, head of Albemarle's Energy Storage division, told investors on
Thursday after the company cut its annual forecast and reported disappointing
quarterly results.
Livent, which supplies BMW and Tesla said
it continues to expect strong lithium sales despite its own weak results.
"We see (lithium) supply continuing to be the constraint on demand,"
said Livent CEO Paul Graves.
Pilbara last week flagged a "softening
market backdrop" and ruled out share buybacks or special dividends for
shareholders. Still, executives said that decision was born from a desire to be
cautious for the time being.
"Demand is absolutely there,"
said Pilbara CEO Dale Henderson. "It's just a case of moderating pricing.
It's still a very healthy market."
Mineral Resources, which operates lithium
mines with Albemarle and Jiangxi Ganfeng Lithium, described the market's
current state as a "rebalancing" of supply chains.
And IGO, which holds a stake in a joint
venture that controls Greenbushes, the world's largest lithium mine, warned of
ongoing market volatility earlier this week, but added it believed the
industry's troubles were only "near term".