World's Best Investment Manager Reveals: Second Wave of Lithium Supply Set to Reshape Market Dynamics
The global lithium market is on the verge of significant changes, as a new wave of supply enters the market. UBS analysts have identified this emerging supply from Africa and China as a key factor in reshaping the market's dynamics.
Africa and China are expected to play a crucial role in this new supply wave, with Africa projected to account for nearly 10% of global lithium supply by 2028. Chinese producers are also set to become new marginal cost players, potentially driving down global lithium prices.
As a result of the expected increase in supply, UBS has adjusted its lithium price forecasts downward for the mid-2020s. This could lead to substantial price reductions and impact the profitability of lithium producers and investors.
UBS has downgraded ratings on several lithium equities, signaling the anticipated impact of lower prices on profitability. The arrival of this second wave of lithium supply is poised to transform the global lithium market, with potential implications for existing producers and investors.
In conclusion, the influx of new supply from Africa and China could address concerns about future demand but also pose challenges for existing producers. Investors should prepare for potential price volatility and lower returns in the lithium market, as the entry of new, lower-cost suppliers is expected to have long-term effects on pricing and supply dynamics.
