Post by
Coffeeinvesting on Dec 13, 2018 11:42am
Buy More.
From what I gather, here are the major issues:
1) speculative investments in a market downturn are usually impacted more. For refence, look at LAC’s and ORL’s 10 year charts to see the volatility in prices.
2) there is no accurate form of tracking lithium prices. Investors turn to the China spot price, which accounts for fraction of the total market. Because of this gap, unskilled reporters use the China spot price to misinform investors of the true prices, which are contract prices from big players (ALB, SQM, etc.). Take note that all the big players contract prices are up and predicted to keep going up since the oversupply thesis.
3) Oversupply thesis needs to play its course. Morgan Stanley and other investment banks predicted a tsunami of supply. Since this thesis every large player who stated they will increase supply have all back peddled. SQM/ALB reporting delays, and troubles. Also, will hard rock have the stated conversion capacity in time to meet demand? Doubt it, especially when many of the new conversion capacity is coming from new entrants without experience.
At the end of the day, this is a speculative investment, so expect huge price swings. I believe this is a compelling investment opportunity and will look to increase my position incrementally as price falls. If anything, I welcome this opportunity right now as the lithium story is just starting. This is evident through increase in China EV sales, Tesla’s success, and every car manufacturer with an EV roadmap.
Lastly, the demand story is there, and this is evident through the number of battery factories in construction (560).
The biggest benefit to this industry would be a standardized pricing contract. Which is in the works.
Cheers
Comment by
Coffeeinvesting on Dec 13, 2018 11:44am
Battery factories in construction 5 to 60. Not 560.
Comment by
jeremyhogg on Dec 13, 2018 12:39pm
That was a great post. Thanks for that.
Comment by
mikerosoft667 on Dec 13, 2018 8:11pm
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