demand/supply of Li vs. demand/supply of smart and idiotsPart 1
Initial report from Morgan, smart. They predicted oversupply (and in short term they are correct) and invented flashy term "tsunamy oversupply" - smart because people falling for it, is it true?
Let start with supply of smart ideas.
Investopedia and Morgan are, let's go to the source:
https://www.investopedia.com/investing/why-lithium-stocks-are-plunging-amid-electric-car-boom/
"Morgan Stanley forecasts that new supply from Argentina, Australia, and Chile, could add 500,000 tonnes of lithium to the market per year by 2025. That’s more than twice as much as the current annual supply of approximately 215,000 tonnes"
500+230=730K (230K is more realistic)
Looks impressive, but what about demand? I could not find any agreements. It vary from 700K per BMO to 1M Albemarle. I took most prevalent 20% a year. What do we have?
| | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| Demand | 215,000 | 258,000 | 309,600 | 371,520 | 445,824 | 534,989 | 641,987 | 770,384 |
| Supply | 230,000 | ? | ? | ? | ? | ? | ? | 730,000 |
Unfortuanately, Morgan did not give yearly. But I do not see tsunamy. Year per year, it surely can overlap and we may see oversupply in 2020 and 2021, but being overly dramatic only hurt. Most important, Morgan ignored basic rule of business, oversupply bringing prices down. Lower prices, decrease supply.