Andy Leyland: Lithium Hydroxide Demand and Oversupply Worries

At this year’s Lithium Supply and Markets conference in Las Vegas, the Investing News Network had the chance to speak with Andy Leyland, Head of Forecasting at Benchmark Mineral Intelligence.

Leyland talked about how lithium prices have performed this year and what he expects going forward.

“We have seen some softness in prices, [but] the expectation is the Chinese market will pick up a little bit in the second half of the year and again we’ll see prices maintained at a reasonably comfortable level,” he said.

Speaking about whether lithium carbonate and hydroxide prices will converge in the near future, Leyland said that from a production cost point of view, in the long-term, some convergence in the market is expected.

“However, what you’re seeing at the moment is a lot more demand for lithium hydroxide in the immediate future,” Leyland said.

He also shared his thoughts about oversupply worries in the market, which hit lithium junior stocks earlier this year.

“[Some] model the industry based on a lithium carbonate equivalent basis and [as a result] it looks like the market would be going into oversupply,” he explained.

“But a lot of what they’ve actually modeled is spodumene production, and that is not going into oversupply as quickly as people thought because there isn’t the conversion capacity and then you have issues of quality and certification which keep the market quite tight,” Leyland explained.

According to the expert, the level of price support in the lithium market is a lot higher than you would normally expect in a commodity market.

“[Even] if you are in a position of oversupply, you still need to double, triple capacity in the coming years so you still need to invest. So, it’s not just even your total costs or your capital repayments, you need an incentive price to continue to expand. So, our view is actually that you can have oversupply in this market and still have historically high price levels,” he said.

Listen to the interview above for more insight on lithium supply and demand dynamics from Leyland, including his thoughts on forecasting, prices and what’s the next metal to watch.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.