Lithium | Aussie Stock Forums

Lithium has had a great run in recent years due to increasing demand from primarily electric car and battery manufacturers. However, just recently I have noticed various reports suggesting that lithium supply is going to outstrip demand in the coming years due to the increased production largely coming from Chile and Australia. Yesterday, Morgan Stanley forecast that lithium prices would fall by 45% by 2021 as a result of increasing global supply. Another article at oilprice.com is similarly suggesting that the current lithium price is approaching bubble territory.

Of course, there is no shortage of articles suggesting the exact opposite, that while lithium supply will undoubtedly grow so will demand. A number of countries, including China and India, are planning to phase out sales of gasoline and diesel cars entirely, although most of the timelines I have seen suggest that this is 15 to 25 years away. Some smaller European countries such as Norway hope to implement bans as early as 2025.

Then there is the battery market which has grown strongly due to the proliferation of smart phones and other portable electronic devices, not to mention the huge growth of solar power where the bulk of battery sales are yet to come due to the current price of products like the Tesla Powerwall not representing a good return on investment for most of those home owners with solar panels installed on their roofs.

So, what is the future of lithium? Apparently it is abundant and relatively cheap to mine. I guess the big question is, can demand keep up with supply?