Why lithium has turned from gold to dust for investors

Trade frictions and geopolitical uncertainty have made 2019 a challenging year for commodities investors in general. However, few resources have been trickier to fathom, or more unpredictable, than cobalt and lithium. Before the advent of modern electric vehicles (EV), lithium was known for decades as a medicinal cure for depression. But plummeting prices for the commodity – a crucial raw material in the manufacture of high-powered lithium-ion EV car batteries – have given investors the blues. Lithium carbonate prices assessed by S&P Global Platts have tumbled more than 20 percent this year to around $10,000/mt amid a global glut of supply, which has outstripped demand for EVs. Once dubbed the new “white gold” when prices peaked at a record over $25,000/mt in 2017, lithium is now being branded “white dust” by some companies burned after overinvesting in its large-scale production and processing. “Lithium supply is growing far quicker than lithium demand and this can be said for all battery materials as the EV pick up rate is not expected to really start increasing until the early to mid-2020’s,” said Marcel Goldenberg, manager for metals and derivatives at S&P Global Platts. Investment bank Morgan Stanley now forecasts prices could fall by… continue reading

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