Investors of Lithium Stocks Need to Brace for Demand Lag

Benjamin Cox |


Benjamin discusses the complexities of the lithium market by comparing it to scotch in how supply and demand play out. With scotch, supply lags five years behind demand, since theoretically it takes at least five years for it to age. Lithium is similar in how supply is determined three years prior to it being available. Benjamin uses the auto market to show this; specifically, how demand for cars typically goes down 25% (which he points out is a fairly normal shift). The supply level for lithium has already been determined, even though it is about to have a major shift in demand. Benjamin contends that this will cause lithium’s price to plummet, which will then cause people to turn down lithium production, which will then be an issue once demand is needed and there is too little supply. Benjamin thinks that this will lead to bankruptcy for producers in the lithium market, and he fails to see how it can be a stable business.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

Immunovaccine Inc.

Immunovaccine Inc is clinical stage biopharmaceutical company. The Company develops products based on its proprietary vaccine enhancement platform in T cell activating therapies for cancer.

Private Markets

Quants Inc

Quants, Inc, a California Corporation, develops, markets and operates financial technology platforms and alternative investment products offering sophisticated risk management since 2010. The Company has primarily sharpened its focus with…

iPRO Network, LLC

We provide the platform, tools, and resources to empower individuals and professionals to market desirable goods and services to the public, taking the place of traditional methods of commerce.