Lithium stocks drop after calls that Battery ‘Bull Market’ is over

Australian lithium stocks have fallen remarkably after analysts from Goldman Sachs predicted that the material’s price has reached a peaked. Their predictions outline are that the price may fall 76% from its current highs. The predicted price drop is due to an oversupply that has been produced in the short-term outpacing the demand. In addition, Argentina, one of the world largest producers of Lithium has called into question its own investment into Lithium and the direction of the country’s move into the material, due to environmental factors and the economics of the projects.

Lithium has seen a dramatic run in recent years as the market has shifted its focus towards renewable energy and electric vehicles that require lithium for batteries. The spot price of lithium carbonate rose sharply to reflect the demand as seen in the chart below which is approximately 65,000 USD per tonne. The price is still holding despite the recent negative sentiment.

Despite the positive spot price, the negative sentiment has caused a significant drop in the price of the major lithium companies. AKE and PLS fell between 10-20% and junior lithium miners were punished even more as their valuations took a hit. Companies such as CXO and LTR fell almost 20% as holders looked to move their money out of the stocks.

Whilst the price action has been brutal, spot prices remain steady and the demand for lithium continues to grow as the world progresses to a more environmentally friendly future.