Rodney Hooper: Lithium Structural Deficit Still Ahead, Mass Investment Needed

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Lithium prices remain at historic highs after rallying in 2021 on strong demand from the electric vehicle sector.

RK Equity's Rodney Hooper thinks a structural deficit is in the cards, even amid bearish oversupply calls from investment banks.

“I keep mentioning it — the only way to get this market in balance, or in oversupply, is to have an excess of upstream investment, and we just haven't seen that,” he told the Investing News Network.

“We haven't seen enough projects permitted. We don't see enough projects under construction. And if anything, we're seeing new projects that were assumed to be coming online already be slightly behind schedule.”

Speaking on the sidelines of this year’s Benchmark Week, held in Los Angeles, Hooper said he expects 2023 to have a supplier shortfall at least as big as this year, if not bigger. “I have readjusted my price forecasts, and I see around US$65,000, US$70,000 a tonne certainly as a price holding,” he said. “So I don't see any sort of dip until 2025.”

Even though lithium stocks have suffered in recent weeks, most have seen year-on-year share price increases due to higher lithium prices, strong demand and optimism about the electric vehicle sector. But is it still a good time to buy lithium stocks?

“Lithium shares have run, so one needs to be selective,” Hooper said. “But I do see the market price holding for some time, which means that anything coming into production in the next while is going to enjoy high prices.”

Hooper believes there’s still value to be found in some early stage companies.

“I still think that early stage companies that can drill up have a lot of opportunity if we’re going to see elevated prices for most of this decade, which a lot of us believe that you will, and not necessarily at these levels, but high enough to be very profitable and well above what's priced into the market,” he said.

Hooper also shared his insights on what to expect in the battery metals space in 2023, and which other battery metal aside from lithium he is keeping an eye on. Listen to the interview above for more, or click here for the full Benchmark Week playlist.

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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.