While lithium production kicked into high gear over the last couple of years thanks to a global drive to reduce overall greenhouse gas emissions between 2030 and 2050, the substantial drop in lithium prices seen in recent months has caused many to wonder if the lithium boom has finally run its course.
Indeed, Michael Gable, managing director at Fairmont Equities, glumly declared that the price of the vital metal has plunged by up to 80% within this year. Despite this, is it still possible for lithium to stage a raging comeback in 2024?
It’s Happened Before
Many mining market watchers note that the current state of the lithium scene is reminiscent of how the iron sector was around ten years ago.
At the time, the price of raw iron ore plunged to two dollars on the global market. This has prompted current market watchers to wonder if the unethical practice of selling low-quality output at outrageously high prices done by countries like China will throw a wrench into the global industry.
Such practices have driven many to sell their lithium shares throughout much of the second half of 2023. Gable has also noted an accelerated pace among those selling, while those of a bearish frame of mind are sticking to their guns. The fact that the adoption of electric vehicles – the biggest lithium-using industry these days – has slowed down throughout the third and fourth quarters has not helped.
But Gable believes that the pessimism felt throughout the market will lead to capitulation which, in turn, will drive prices down to more reasonable levels.
Is There Too Much Lithium?
But as to whether or not there is a current oversupply of the metal, Gable doubts it.
While the recent news about new mining initiatives in the offing has fueled rumors that some firms may be hoarding larger than publicized supplies, the amount of lithium currently in stock has not grown throughout this year.