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Lithium Prices Remain Strong In Q1 2018

Apr. 25, 2018 9:59 AM ETALB, AVLIF, FMC, LAC, MLNLF, OROCF, SQM, TM, AKE:CA, LAC:CA17 Comments
Livio Filice profile picture
Livio Filice


  • After a multi-year increase in lithium prices, they continue to remain strong in Q1 2018; an overview of what has transpired and driving firm prices.
  • Despite the sell-off in shares of high-quality lithium investments due to a fear of market oversupply, chemical prices do not echo these concerns.
  • I believe that strong lithium prices will continue to attract investment into the lithium supply chain.

As lithium chemical prices outside of China continue to play catch-up with Chinese domestic pricing, various opportunities are arising. One significant opportunity produced by this situation is the need for large battery and material companies to identify and secure meaningful volumes of lithium supply. Many Chinese companies throughout the value chain, from battery material players to automotive groups, are highly dependent on the supply of low cost, high volume and of battery-grade quality. A lack of supply of the white material could hold up the production schedule of an entire industry. This issue has especially serious ramifications for the automotive industry, which is required to meet Chinese government implemented targets starting in 2019. Beyond the short-term ramp up in battery production, the new energy vehicle market in China and around the world is poised to grow over the next years, ensuring that battery and related materials acquisition remains a top priority for industries that are highly dependent on secure supplies. Based on this overall macroeconomic trend, lithium prices will remain strong over the coming years, leading to good equity investment opportunities in lithium mining and exploration businesses. It is my opinion that energy metals and technologies focused investors should have good exposure to advanced stage lithium explorers and early stage production companies, as these will greatly benefit from increasing lithium prices.

Another significant and growing trend in the lithium chemical business is the movement of Asian capital into lithium exploration and production companies. I view this as a clear signal that we are ahead of a significant long-term bull trend in demand for lithium chemicals. It is my opinion that as the lithium price continues to remain strong over the next 12-24 months, additional investments will be made into lithium exploration and mining companies who are looking to increase their production or moving

This article was written by

Livio Filice profile picture
Focus: Lithium exploration and extraction, various energy metals, battery technologies, integrated energy storage systems, electrification of transportation and urbanization megatrends, residential and commercial energy storage technologies. Filice is a seasoned investor with experience in various types of investments, including more than fifteen years in small cap and penny stocks. Over the course of his career he has assisted in investor activities for several mid-stage companies, both publicly traded and privately held. Filice offers substantial first-hand experience in the lithium battery supply chain including new technology product introduction strategies.

Analyst’s Disclosure: I am/we are long AVLIF, OROCF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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