Lithium stocks were decimated over the last few weeks.
But the pullback is overdone.
For one, according to SQM, it’s “confident that the boom in electric vehicle (EV) sales will be a crucial driver of global demand for the soft white metal. Electric vehicle sales worldwide are expected to rise by around 30% this year, while lithium demand will increase 20%, the company forecast in its 1H23 results report,” as noted by CNAmericas.com.
Two, Albemarle expects to see higher lithium prices and supply tightness. In fact, on its second-quarter earnings call, CEO J. Kent Masters said, “Customers are returning to the spot market after destocking to unsustainably low levels of inventory against the backdrop of growing demand, with lithium inventories decreasing in the supply chain over the last few months.”
Three, according to a Seeking Alpha article, “Supply constraints may also be a major driver for pricing. As shown in the chart below by the IEA, lithium production from existing mines is expected to flat after 2025, while the contributions from new mines are also minimal, as the sector remains under-invested.”
All could send lithium prices – and oversold lithium stocks, such as Albemarle (ALB), Livent (LTHM), American Lithium (AMLI), and Lithium Americas (LAC) to higher highs.
