Prices Soaring for Lithium

August 19, 2016

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Many resource sectors have been been losing steam as of late, except lithium, a driving source used in rechargeable batteries.

Bloomberg reported that, “booming demand outpaced production thanks to the faster-than-expected growth in global electric-vehicle sales.”

As quoted in the news article:

But a lot more lithium is on the way. The four largest producers — Rockwood Holdings Inc., Soc. Quimica & Minera de Chile SA, Albermarle Corp. and FMC Corp. — control as much as 90 percent of the market. With prices surging, those companies may now look to increase output, while a host of newcomers are racing to get into the business of producing lithium, which can be extracted from mines or by evaporating brine in salt ponds.

“We expect to see the peak in prices coming pretty soon,” said Robert Baylis, a lithium market analyst and managing director at London-based Roskill Information Services, who predicts prices will peak in the second quarter of 2017. “Normally these things don’t tend to last too long. You get a supply reaction in lithium. There’s more material coming on the market.”

So far, the big four have been producing below capacity even as prices rose, partly because lithium is a small part of their businesses. For example, FMC generated just 7.3 percent of its revenue last year from lithium, with the rest coming mostly from chemicals used in agriculture, health and nutrition. But with new players jumping in, the top suppliers will be forced to expand output to protect market share, according to Macquarie Group Ltd.

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Category: Energy