Citi is bearish on lithium — at least for the near future. Which is simply because China’s substantial electric powered automobile sector is showing signs of slowing, the bank stated, citing the country’s removal of EV subsidies and Tesla’s suspension of production at its Shanghai plant. Lithium is a crucial component of electric auto batteries. On prime of that, demand in Europe has been slowing, thanks to superior electrical power charges and an economic slowdown, the financial institution additional. “[We] stay cautious on lithium commodity as … EVs product sales could be softer in 2023 right after the subsidy expires and China lithium place cost may perhaps face headwinds beyond 1Q23,” Citi claimed in a Jan. 3 be aware. But the financial institution just isn’t turning fully damaging on lithium, declaring it really is bullish on its extensive-time period outlook. It expects lithium demand to improve its compound yearly expansion level by all-around 20% by 2030, and that its supply will battle to capture up. Names to watch Citi named a few shares to enjoy irrespective of its careful lithium outlook. Its most desired identify is U.S.-dependent Albemarle , which it gave a value goal of $295, or 38% upside. Citi also likes Livent Company , which it gave a $27 target value, or 42% upside. But it warned that Livent, being a pure-participate in lithium producer, is a inventory delicate to changes in the lithium current market. “Lithium has the potential for higher progress, pushed by need for battery applications. Hence, modifications in the pace of adoption for electric powered motor vehicles or electronics, because of to energy charges or some other factors, could have considerable implications for lengthy-time period lithium provide/demand from customers,” Citi analysts wrote. The financial institution added that as Livent’s enterprise is seriously reliant on its lithium source in Argentina, the Salar del Hombre Muerto, any political or financial risks in the country would influence the business. For instance, Argentina not too long ago imposed an export tax on sure products together with lithium, Citi famous. Citi also named Sociedad Química y Minera de Chile , the world’s largest lithium producer, which soared 58% in 2022. Citi downgraded the stock from “buy” to “neutral” in mid-December, supplying it a selling price goal of $92 — with upside of about 20%. But the financial institution expects more threats to the downside for the company, citing price tag volatility as a main danger to that concentrate on. “Price ranges of SQM’s products and solutions are linked to global prices, which differ substantially because of to offer/demand from customers dynamics,” Citi explained.
