This week, lithium stocks across the globe saw a dramatic shift downwards due to a predicted supply surplus in 2024 and 2025. Experts suggest that the surplus drives prices downwards, thus leading to market fragility and fewer investment opportunities.
Lithium stocks fall due to supply surplus
Although, new figures predict that the increased demand for electric and hybrid-electric vehicles and increasing energy storage systems will popularise lithium usage and push demand to $2.5 million per metric ton by 2023. In 2023, this figure is expected to hit $1 million per metric ton, a 1.25% increase if the demand trend continues.
Bank of America (BoA) analyst Steve Byrne slashed the price target of Albermarle to only $161 amid supply concerns. Although, supply may be limited considering many projects in the US and Australia are Greenfield mines as opposed to Brownfield exploration. Many of these projects involve small miners who face capital constraints that could lead to further delays to the supply chain.
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It is worth noting that Liontown Resources (LTR) was at $1.52 in March prior to the Albemarle interest. China’s spot price for lithium fell 70% this week from its peak of $23.850 per metric ton since last November. It may be that equity will be issued at the lower end of the range.
