Neo Lithium Corp V.NLC

Emerging markets demand pushing lithium prices up

[Kevelle]

As a general rule, the most successful man in life is the man who has the best information 

Economics has been called “the dismal science” for its conclusions which often suggest miserable outcomes for humanity. The saying was born in the 19th century by Scottish writer and philosopher Thomas Carlyle, who was referring to economist Thomas Malthus. Malthus famously calculated that humanity was trapped in a world where population growth would outstrip resources and lead to widespread misery including starvation – a condition known as “The Malthusian dilemma.”
 
Economics is dismal for another reason: it often fails to make accurate predictions.
 
We see this in the monthly US employment figures which are usually wrong, and in the copper supply projections trotted out by commodities analysts. Every year these analysts dutifully tally up the predicted market supply tonnage based on output targets from the major producers, and almost every year they turn out to be wrong. Why? Because these so-called experts failed to account for the gaps in output that occur due to strikes, extreme weather, bans on concentrate shipments, or any other reason why a mine closes temporarily due to “force majeure”.
 
Now the same thing is happening with lithium, with two recent reports coming up with predictions of a slide in lithium prices due to a glut of new supply overwhelmingly the tiny (by mining's standards) lithium market. What is puzzling is that both of these reports either gloss over or fail to adequately break down the demand side of the lithium market – something we at Ahead of the Herd did some time ago in a separate article. The conclusion we came to was that lithium demand is skyrocketing, and will continue to do so in coming years, due to the irreversible trend of moving from internal combustion engine-powered vehicles to electric vehicles. The trend is particularly evident in Asia. China is the largest EV market by volume, while Japan is number three behind the US. India is also aggressively ramping up EV targets. Of course we've seen the demand scenario play out through lithium prices, which have doubled in the last two years and are current trading at around $23,000 a tonne for battery-grade lithium carbonate. Still, the lithium bears are coming out from hibernation, and lithium stocks have been taking it on the chin.