Goldman Sachs rattled lithium stocks after the investment bank declared the battery metals bull market “over for now”.
Goldman calls today’s lithium levels a “fundamental mispricing [that] has in turn generated an outsized supply response well ahead of the demand trend in focus.”
In this context, Goldman sees prices on a downward trajectory over the course of the next two years, with a sharp correction in lithium from today’s levels to an average of just under $55,000 this year. For 2023, the forecast is for an average price of just $16,372.
The widely quoted report prompted a sell-off in lithium stocks, with heavy losses across the board.
In North America, Livent was the worst performer – down 14% on the day followed by Piedmont Lithium, which lost 13.4%.
Heavyweights Albemarle and SQM gave up 7.8% and 5.1% respectively, but Ganfeng managed to contain the downside to 3.9% in Hong Kong.
In Australia, the damage was generally greater – led by Liontown Resources and Pilbara Minerals, both down around 20%. Allkem, Core Lithium, Lake Resources, Firefinch and Ioneer all declined by double digit percentage points.
After a pullback from record highs in April, lithium prices have now stabilised with Benchmark Mineral Intelligence’s price assessment pegging battery grade lithium carbonate (EXW China, ≥99.5% Li2CO3) at a midpoint of $69,450 per tonne for the past week, up slightly on the week before.
That’s still up 85% over the first five months of the year and compares to prices this time in 2021 below $20,000. Technical grade lithium carbonate was assessed at just below $65,000, up 1.5% for the week.
Benchmark said positive sentiment surrounding Shanghai covid-19 restrictions, which are planned to be incrementally lifted from June 1, is “set to see downstream demand return to typical levels.”