Monday, February 26, 2018

"Lithium Miners' Pain Is Tesla Gain As Prices Seen Plunging This Much "

We didn't post our reminder last week simply because we were trapped in a meeting and bored silly.

I mean that was part of it but "Lest We Forget, In April 2017 Platts Forecast Lithium Supply Would Outweigh Demand by 2018" had a couple good links as well.

Today's headline story is from Investor's Business Daily:
Sociedad Quimica y Minera de Chile (SQM), Albemarle (ALB) and other lithium stocks tumbled Monday, on worries that surging output to meet demand from Tesla (TSLA) and other makers of electric vehicles will weigh on prices.

 Analysts at Morgan Stanley said that new and expanded lithium mines in Chile "threaten to add" roughly 500,000 metric tons per year to global supplies by 2025. They predict lithium prices will crash 45% by 2021.

Tesla and other electric car manufacturers use lithium ion batteries to power their vehicles. Last month, SQM and the Chilean government reached a deal to increase production as battery demand climbs.

Morgan Stanley downgraded Albemarle to underweight from equal weight and lowered its price target to 85 from 100, and also downgraded SQM to underweight from equal weight.
Albemarle shares plunged 9.1% to 107.95 just past midday on the stock market today. SQM tumbled 8.3%. FMC Corp. (FMC) was down 3.1%. Global X Lithium & Battery Tech ETF (LIT), which has holdings in Albemarle, SQM and FMC, fell 4.2%.

Tesla rose 1.5% to 357.38.

Albemarle will report quarterly earnings Tuesday, and SQM is on tap for Wednesday....MORE
Jan. 29

"Tesla is reportedly looking to invest in Chile’s largest lithium producer"
That might explain Mr. Musk kicking around Chile a month ago and SQM's regulator giving the green light to expand production....
Jan 18
Lithium: After Four Years of Negotiating, SQM and Regulator Reach Agreement On Increased Production (SQM; ALB)
Jan. 7
Lithium: Here Comes the Supply Surge
Dec. 29
"Welcome @elonmusk to Chile, the Saudi Arabia of lithium, a potential 'solar country' and a leader of world economic freedom."

August 2017
Eighteen months ago we went with cobalt over lithium as the battery material that would be in shortest supply and think that is still a correct assessment. However, if long-suffering reader is interested the 'search blog' box has quite a few hits for 'lithium'....