Stock Strategist Industry Reports

Lithium Price Concerns Result in Buying Opportunity

Seth Goldstein, CFA

On Dec. 20, shares of all three lithium stocks we cover traded sharply lower as junior lithium producer Orocobre announced its outlook for lower prices into 2019. We already expected lithium carbonate prices on a Chilean export basis to fall from $12,000 per metric ton in 2018 to $10,000 per metric ton by 2020. However, we believe prices will recover thereafter.

As a result of our above-consensus electric vehicle outlook, we forecast 19% annual demand growth for lithium over the next decade. This will ultimately require higher-cost lithium supply to come on line to meet demand. As such, we expect lithium carbonate prices to rise back to our long-term forecast of $12,000 per metric ton by the end of 2022.

Seth Goldstein, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.