At the end of May, Goldman Sachs rattled lithium stocks after the investment bank declared the battery metals bull market “over for now”.
Goldman called today’s lithium levels a “fundamental mispricing [that] has in turn generated an outsized supply response well ahead of the demand trend.”
Goldman predicted an average around $55,000 a tonne for this year, but its forecast for 2023 was particularly eye-raising – a very precise $16,372 a tonne.
The widely quoted report prompted a sell-off in lithium stocks, with heavy losses across the board. Many in the sector are still down by double digit percentage points since the report, damaged further by general market weakness.
In a new note, Benchmark Mineral Intelligence, a battery supply chain and price reporting agency, responded to Goldman’s central thesis that the lithium market is ready to “pivot towards a prolonged phase of surplus starting this year.”
Benchmark outlines five reasons why it feels the call was wrong:
Benchmark expects the market will remain in structural shortage until 2025 and expects changes to pricing mechanisms and increasing contract deals:
“As the market wrestles between long-term supply security to fuel the lithium ion economy, and increasingly market-led pricing mechanisms to incentivise supply growth, the era of lithium market volatility is likely just beginning.”