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Brighter Lithium Outlook Boosts Our Valuations

All three lithium producers we cover are undervalued.

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We have updated our medium-term lithium price outlook and now expect that supply and demand will reach a balance in 2021, one year earlier than in our previous forecast. As a result of continued rapid demand growth, lithium prices should stabilize in 2020 and rise thereafter. Our long-term lithium carbonate price forecast of $12,000 per metric ton in 2020 real terms based on published London Metal Exchange prices is unchanged.

We forecast electric vehicles and hybrids will make up 20% and 30% of new auto sales in 2030, respectively. Given this combined with growing lithium demand from batteries for energy storage and other transportation including buses, motorcycles, and commercial delivery vehicles, we forecast lithium demand will grow from 295,000 metric tons in 2019 to 1.9 million metric tons in 2030, which represents a 19% annual growth rate.

Seth Goldstein does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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