VIDEO - Joe Lowry: Lithium Sector Needs “Big 6” Players

Battery Metals

Joe Lowry of Global Lithium shares his thoughts on prices, the LME contract, the “oversupply myth” and what’s ahead for the sector.

Lithium prices, the London Metal Exchange (LME) lithium contract and mergers and acquisitions have been the main topics in the lithium space so far in 2019.

Speaking at this year’s Lithium Supply & Markets Conference, President of Global Lithium Joe Lowry discussed why he thinks prices will remain above Morgan Stanley’s (NYSE:MS) US$7,300 per tonne range, despite the downward trend seen and expected for the rest of the year.

“When prices were in the (mid-US$20,000s) they were panic-generated prices — the cost curve didn’t justify them, you had high-cost producers making more than 50 percent margins, and that is just not sustainable in an industry like this,” he said.

Lowry, who also co-hosts the Global Lithium Podcast, has been trying to debunk what he sees as the “oversupply myth” in the lithium space.

“I think 2019 is still a year of a bit of confusion,” he said. “The oversupply myth has really hurt the lithium chemical sector … At best, it is at balance, but not in a huge oversupply.”

The expert also shared his thoughts on the LME’s efforts to launch a lithium contract and whether this will help the industry going forward.

“Investors don’t have clarity on the indicators of what future prices might be, so an LME product would help with that,” Lowry explained. “But for contracts … I don’t think anybody is going to use the product to set their contracts based on that.”

Earlier this year, the lithium space saw diversified company Wesfarmers (ASX:WES,OTC Pink:WFAFF) make an AU$776 million takeover offer for Australian lithium developer Kidman Resources (ASX:KDR,OTC Pink:KDDRF), with many investors wondering if this acquisition trend will continue.

“I think we will see more of (those deals) going forward,” Lowry said. “I think it was great because we need another big player in the market.”

Watch the video above for more of Lowry’s thoughts on the lithium space, including his best suggestion for investors interested in learning more about the industry and what factors could impact the space in the second half of the year.

You can also click here to watch our full Lithium Supply & Markets Conference playlist on YouTube.

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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 the interviews it conducts. 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.

The Conversation (1)
Fred Haering
Fred Haering
17 Jun, 2019
I have made speculative investments in several lithium developers & of course producers over the years. A futures market would be ideal, but impossible when the largest processor is China, viz. consumer & potential stickpiler. He who controls product, controls price. corporate China Inc. will continue to obfuscate REAL supply as they continue to deepen their victory of the EV control worldwide. Classic case of Central Economic governance. The West seems to be living with their heads in the sand. Remember, if China determines a future policy, they put everything behind that strategy: tarries, subsidies, domestic incentives, censorship, jail, bullying,etc. It won’t end with lithium, ended already with RARE earths & is being wrapped up now with cobalt control. Any car manufacturer of the future will eventually find themselves bought-out / controlled by China Inc. price controls are part of the strategy. Keep your eyes on A.I., Robotics, CRSPR ... and yes 5G!