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At the end of May, Goldman Sachs rattled lithium stocks after the investment bank declared the battery metals bull market “over for now”. Goldman called today’s lithium levels a “fundamental mispricing [that] has in turn generated an outsized supply response well ahead of the demand trend.”  

Goldman predicted an average around $55,000 a tonne for this year, but its forecast for 2023 was particularly eye-raising – a very precise $16,372 a tonne. The widely quoted report prompted a sell-off in lithium stocks, and a flurry of reports taking on Goldman’s thesis.��

Three weeks later, the bloodletting has not stopped, with Australian hard rock producers particularly hard hit. Many investors are nursing losses around 30% – and more among the smaller stocks – since the publication of the report (China’s Tianqi and Ganfeng, now the world’s most valuable lithium producers, being the obvious exceptions.)   

In a , Matt Fernley of Battery Materials Review says equity markets are getting just about everything wrong about lithium.�� 

Fernley concludes that “until the penny drops with most investors, I’ll be enjoying myself doing some bottom fishing and picking up many of these oversold stocks at prices I never dreamt that I would be able to again in this cycle.”

Spodumene surge

Pilbara Minerals (ASX: PLS) is a good example of the extent to which stocks have decoupled from realities on the ground. The ASX-listed hard rock miner today announced another record price for its spodumene concentrate at auction of $7,017 a tonne (SC 6% CIF China basis). That’s up around $500 from a month ago.��

After an initial bump following the announcement, Pilbara Minerals ended the day in Sydney down again. The stock is now down 30% since the Goldman report and 47% from its recent high. Its performance is also much worse than the broader market – the ASX is down around 10% over the same  period.��

Dale Henderson, Pilbara’s chief executive officer, in an , took a swipe at industry naysayers:  

“Contrary to recent suggestions that the market has peaked, the evidence we are seeing at the coal-face with our customers, including this pricing outcome, suggests that the demand remains incredibly strong.”

The weekly price assessment published on Wednesday by Benchmark Mineral Intelligence, a battery supply chain and price reporting agency, shows an uptick in prices in China from the week before.

After a pullback from record highs in April, lithium prices have now stabilised, with Benchmark Mineral Intelligence’s price assessment pegging battery grade lithium carbonate (EXW China, ≥99.5% Li2CO3) at a midpoint of $69,875 per tonne for the past week, up slightly on the week before.��

That’s still up 88% over the first five months of the year and compares to prices this time in 2021 below $20,000.