Neo Lithium Corp NTTHF

demand/supply of Li vs. demand/supply of smart and idiots

[supersceptic]

Part 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.

[supersceptic]

Part 2 BMO https://www.mining.com/lithium-demand-battery-makers-almost-double-2027/ This is truly gloomy picture. I am not sure whether BMO hired Kramer like analytics or basic economic principles stopped working. 2018 oversupply - Ok, when prices up new project start, old expand, not many see much further than a year from now. 2019 - 2021. I also understand, oversupply can grow. Money already

[JMark80]

Didn't Morgan buy into LAC after releasing their bear case? Many of these firms predictions are garbage or self interested. How many predicted the 2007 subprime mortgage crisis?

[Papino0]

into GXY :  https://www.fool.com.au/2018/07/13/lithium-bear-morgan-stanley-discloses-position-in-galaxy-resources-limited-asxgxy/ and while we wait, here some positive comparisons for NLC : https://www.linkedin.com/pulse/standard-lithium-complete-pea-laxness-brine-project-ryan-d-long/?published=t

[supersceptic]

Great links. I've read quite few articles after Morgan's report, but most fail to mention their move, predicting price collapse and buying into it... NLC surely look like a star. I have small problem with NLC management conservative presentation, they are too conservative. I would prefer them to be in middle of the pack with projected prices. Would help NPV and valuation. Investor often

[tiger6301]

Hi S-S, Always good post from you. If you watch a few of presentaions or interviews from Chile's lithium conference, you would realize that the Whole Lithium Sector is very low, and not too much interest from investors, due to low lithium price and over supply concerns.  In my opinion, the over supply is a short term due to the rapid developments in Hard Rock Lithium from Australian

[supersceptic]

Thank you tiger. Have fun in Alaska. Yes, Australia, Greenbushes in particular was fast to react. That is what happened when prices are sooting unreasonably high. Crowd rush in, then running away in panic. We are, probably, on last stage of panic - frear to come back. We can simply out wait it, as you mentioned. The problem - no one knows when tide reverses. Week before Morgan's report it was

[LithiumNPV]

Let's say the current oversupply problem predicted to 2025-27 improves so that it is 2021-22.  That's still bad. Things will, therefore, get a lot worse before they get better. Equity markets typically predict 9 to 12 months into the future. So 12 months before 2021 means the bottom lithium equities won't occur until at least the end of next year at best. That will be a drop of 3

[supersceptic]

I agree, many "predictions" are as you mentioned garbage or simple manipulations. At least, Morgan's s-t were more or less correct (no "tsunami" of course) and had basic logic. Also, after 2007 gloomy predictions get more in fashion, many afraid to miss problem and look like fool again.

[LithiumNPV]

How did Morgan ignore this basic rule? Morgan predicted the price would go down because of oversupply and that's what's been happening. 

[LithiumNPV]

That's funny. I read this and thought to myself I totally agree with this comment, then realized it was me who posted this. SS is learning the hard way, but not listening to me when I said the market will be oversupplied at least till 2025.  I was told no reports existed of an oversupply. We are reading the same reports so not sure how he and others could overlook these reports. True