There were a few things going on. You had the big jump in nickel triggered by stories of a blast at an Indonesian mine combined with position squaring at the LME in thin trade.
You had some chatter in copper that this was positive for the red one before the reality of lower nickel supplies actually implying less production on the electric vehicle front.
You had China doing their damnedest to support the property sector but not so much the construction sector. And then there's Goldman throwing cold water on the lithium party (don't throw water on lithium batteries, it's possible they can ignite and maybe even explode. And don't buy any cars from Florida for fear of flood damage and delayed combustion).
From The Motley Fool, November 15, 12:52 pm:
Why Lithium Americas, Livent, and Albemarle Stocks Fell Sharply on Tuesday
Key Points
- Goldman Sachs released a new forecast for lithium supply and demand this week.
- For the past couple years, the world has demanded more lithium than producers could supply -- but this is about to change, say analysts.
- As early as 2023, lithium prices could begin to fall, and by 2025, the world may be in a state of chronic lithium oversupply.
(Most) lithium stocks have had a good year so far -- but all good things come to an end.
What happenedTuesday is turning into a miserable day to own lithium stocks, as shares of Lithium Americas (LAC -3.58%), Livent (LTHM -6.83%), and Albemarle (ALB -6.48%) tumble in response to a negative report on lithium prospects from mining stock analysts at Goldman Sachs.
As of 11:15 a.m. ET, Lithium Americas shares are down 3.5%, Livent is off 6.2%, and Albemarle is leading the whole sector lower with an 8.4% loss.
So what
Let's start with the good news: According to Goldman Sachs, demand growth for lithium over the past few years has been "massive." Problem is, the "supply response" to this increased demand has been even more massive.
Goldman's report shows that demand for lithium to build the batteries to power electric vehicles (and to a lesser extent, other battery-powered devices) began to exceed available supplies of the metal around mid-2020. Currently, analysts estimate that there's about a 100,000 ton annual gap between the lithium carbonate the world needs to build its batteries and the amount that lithium miners like Lithium Americas, Livent, and Albemarle are able to produce in a given year.
This has been good news for lithium producers so far, enabling miners to both sell more unit volume of lithium and charge higher prices for the lithium they produce -- turbocharging sales numbers. Livent, for example, grew its revenue more than 120% in the most recent quarter, and Albemarle's sales were up more than 150%. (So far at least, Lithium Americas has been the odd man out in this bull run, as the lithium start-up isn't yet producing appreciable levels of lithium from its operations.)....
....MUCH MORE
Here are the charts on the two largest producers:
Albemarle :
and Sociedad Quimica y Minera:
