No chance. According to the view of the majority of Industry executives and analysts who don’t believe forecasts for a glut in lithium.
Morgan Stanley sent lithium stocks including the world’s largest producers Albermale & SQM tumbling earlier this year after it forecast a surplus in the market in 2022. Morgan Stanley went as far to predict prices nearly halving to $7,699 a tonne. However, some industry officials took issue with the outlook.
“I am firmly of the view that everyone, including Morgan Stanley, is grossly underestimating how quickly the market is moving on the demand side,” Ken Brinsden, chief executive of Australian lithium miner Pilbara Minerals.
China has set aggressive goals to shift away from fossil fuelled engine cars by 2025 and plans to have 20-30% of auto sales being electric. With new quotas due to take effect in 2019.
Lithium is a major ingredient in rechargeable batteries for electric vehicles and forecasters are failing to account for strong demand and how complicated it is to process and mine lithium.
Lithium is mostly mined from hard rock deposits in Western Australia and brine pools in South America. Most of the processing of the hard rock material into battery chemicals is done in Chinese processing plants.
Forecasts of oversupply also fail to take into account that few lithium processors have the capacity and ability to produce the very high-grade lithium compounds that batteries need, said analyst Andrew Miller at Benchmark Mineral Intelligence, a UK-based battery metals consultancy.
He said he does not see a glut occurring in the next few years although the market could see small surpluses.