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  • How Cars And Phones Affect The Lithium Industry 0 comments
    Jan 11, 2013 2:10 PM

    Growing popularity of Lithium funds owes the credit to its extensive usage in portable digital products and automobile industry, the industrial needs are fuelling the demand forecast for the metal which in all likelihood, will continue to grow annually at a positive rate of 24 % till 2021. Following this trend are the big money managers from the Wall Street Inc. who claim to be indirectly tapping on the growing sales of products using Lithium batteries, by acquiring or investing in Lithium stocks. World-wide retail success of products like Apple's I Phones and I pads along with of Toyota's Hybrid electric car are the main focus for this investor league.

    The demand has incredibly increased due to the widespread use of energy effective batteries. Between the years 2003-2007, the industry doubled its consumption of Lithium carbonate, which is a very important constituent of these rechargeable batteries. Since then the industrial demand has more than doubled in the past few years.

    Billion dollar investment firms like JP Morgan Chase have over and again shown affinity to Lithium companies and their listed securities starting 2011. Analyst at Black Rock Inc. agrees and along with Morgan, they are still bullish on Lithium ETFs and equities.

    Most major car makers are now sincerely considering a feasible electric vehicle that can be mass produced, demand surge from the automobile industry itself may be well upwards of 160% from current levels. Toyota Prius is a definite game changer in this class with other mention worthy names is Chevy Volt and Tesla Roadster which are now commonly used electric vehicles.

    The growth of this rare element has depended a lot upon the adoption of clean energy technology. In contrast to lead and other chemical products, it is significantly eco friendly and has much higher energy storing capabilities. The gadget industry would have never inflated to this level if it was not for the easy energy solutions that lithium batteries provide. Its unique attributes and a fact that it is a rare metal found only in the top layer of the earth's crust adds to the importance of miners and explorers of the mineral.

    Mining this metal has gained momentum with the upsurge in its demand and it will remain robust for the coming years. The demand has increased 25% in the years 2010-2012 and it is expected to double by 2020. Also the electric cars using lithium ion batteries are likely to reach 1.5 - 3.0 million in 2015.

    An obvious negative here lies in a sudden scientific discovery that is able to not only display better energy recharging capacities but is also compatible with the existing products that use lithium cells. Reasonably, a better substitute will wipe out the demands for the metal but an invention to carry out such a mutiny is unlikely to occur in near future, indicating a bright outlook on the sector.

    Major Equities like Rockwood (the company produces lithium hydroxide and is world's largest producer of lithium products) and FMC are some of the biggest players of this arena. Other major corporations include Talison Lithium Ltd., Soc Quimica, and Minera de Chile. These companies more or less control the capital market, which is roughly valued to be around a billion dollars annually. Along with the limited choices on the equity front, timing your entry in the markets is another hindrance for direct investments. Investors willing to emulate the trend may use the Lithium Invest and funds that track the Solactive benchmark. Barring Global X LIT there are no pure plays on this industry available, but a country centric fund like Chile ETF may suffice the need for Lithium exposure.

    Global X Lithium Stock correlates to the movement of Solactive Global Lithium Index. The FTSE bench mark fairly mirrors the performance of the sector and ensures a regulatory environ for the ETF investors. LIT ETF operates at an expense of 0.75% and in terms of assets, FMC Corp. along with Quimica and Rockwood account for more than 45% of the holdings.

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