HOLLYWOOD, Fla. (Reuters) – Forecasts for a glut in lithium, a major ingredient in rechargeable batteries for electric vehicles, fail to account for strong demand and how complicated it is to process and mine, industry executives and analysts said.
Morgan Stanley sent lithium stocks tumbling on Monday after it forecast a surplus in the market in 2022 of 190,000 tonnes, resulting in predicted prices nearly halving to $7,699 a tonne. However, some industry officials took issue with the outlook.
“I am firmly of the view that everyone, including Morgan Stanley, is grossly underestimating how quickly the market is moving on the demand side,” Ken Brinsden, chief executive of Australian lithium miner Pilbara Minerals, said at a mining conference in Florida this week.
Pilbara recently inked supply agreements with Chinese and Korean battery- and automakers, giving them insight into Asian demand.China has set goals for electric and plug-in hybrid cars to make up at least a fifth of its auto sales by 2025, with new quotas due to take effect in 2019. It also plans to shift away from petrol-engine cars.
The Morgan Stanley report hit high-flying lithium shares, including the world’s two biggest producers, U.S.-based Albemarle Corp and Chile’s SQM, down as much as 8 percent on Monday. Most were down again on Tuesday.