Citi Citi analyst Shreyas Madabushi remains bullish on the mid-term prospects for lithium prices.
“Lithium spot prices were under pressure this week amid concerns of weakening demand in China. The trigger was news reports of battery producers cutting their cathode production forecasts and the possibility that China electric vehicle subsidies may not be extended into 2023. Prices remain extremely high relative to miners’ production costs of $5-10k/t and compared with average prices of $13k/t over the 2017-2021 period. We remain very bullish on the outlook for electric vehicle sales and penetration rates, and we mark-to-market higher our 0-3 month price for lithium carbonate to $72,000/t (up from $65,000/t), while our $50,000/t 6–12-month forecast remains unchanged. ... Lithium spot prices declined this week after a massive ~1,300% rally which started in 2H’20 — Reports that a major cathode producer was cutting its production forecasts was the main trigger for the pullback.”
The sell-off combined with the analyst’s bullishness suggests a potential buying opportunity in lithium miners for patient investors.