It May be Time to Get Greedy with Lithium

Crisis will eventually lead to opportunities for lithium miners.

Right now, a supply glut is forcing prices even lower. It’s also responsible for mass industry layoffs, and major lithium projects. Falling interest in electric vehicles isn’t helping either. Major companies, like Albemarle, were even just forced to cut its demand forecast for 2030 from 3.7 million tonnes to 3.3 million tonnes, a 10% decrease.

However, this may all be setting the stage for the next big lithium supply crunch.

As prices come down, it’s holding back reinvestment in new supply. Eventually, as demand begins to pick back up, prices could skyrocket again. We could start to see higher demand for electric vehicles, and green energy projects, which require lithium, once the Federal Reserve starts cutting interest rates.

Also, as noted by Albemarle CEO Kent Masters, Low lithium prices are “unsustainable” and will have to rise to trigger the supply investments needed to meet long-term demand growth, as noted by Bloomberg.

Again, crisis could lead to opportunity.

That being said, investors may want to buy the excessive fear in lithium stocks, like Albemarle, Arcadium Lithium (ALTM), Sociedad Quimica y Minera (SQM), Piedmont Lithium (PLL), and even Standard Lithium (SLI).

Or, take a look at beaten-down lithium ETFs, like the Global X Lithium & Battery Tech ETF (LIT).  At $43.54 with an expense ratio of 0.75%, some of its top holdings include Albemarle, Tesla, BYD Co., Arcadium Lithium, Panasonic, and Sigma Lithium to name a few.