Lithium Outlook 2015: Expect Continued Consolidation
Between the activity of major lithium producers, mining in China and developments in the wider electric vehicle market, there will be plenty to watch for in the lithium space in 2015. Chris Berry sees continued consolidation in the cards, and believes that while some new supply is expected to enter the market, there remains a slight overcapacity.
Tesla Motors (NASDAQ:TSLA) certainly made 2014 an exciting year for lithium. Looking forward, however, Tesla isn't the only factor lithium market participants may want to consider — between the activity of major producers, mining in China and even developments in the wider electric vehicle market, there will be plenty to watch for in the lithium space in 2015. Lithium Investing News spoke to Chris Berry, president of House Mountain Partners and co-editor of the Disruptive Discoveries Journal, about what investors can expect from the lithium space next year and what might be important to keep an eye on. To start off, Berry said he sees more consolidation in the cards for the lithium space, stating that while some new supply is expected to enter the market, there remains a slight overcapacity. "This means a focus on low-cost production and balance sheet strength are an absolute must [for companies]," the analyst said. Of course, with Albemarle's (NYSE: ALB) acquisition of Rockwood Holdings (NYSE:ROC) set to close in the first quarter of 2015, that trend has already begun. Overall, he suggested that the lithium space won't reach its real inflection point until 2017, but noted that the time will provide investors with a good opportunity to get educated about the industry. Meanwhile, James D. Calaway, chairman of Orocobre (TSX:ORL,ASX:ORE) was more positive on the nearer-term outlook for lithium. "We anticipate rapidly growing demand and constrained supply," he said in response to a survey on the market. "This should be reflected in strong pricing in 2015 and 2016." Calaway explained that "[m]uch was promised ... but not a great deal delivered," in terms of supply in 2014, and although it's been difficult to get an accurate reading on the supply side of the lithium industry, he believes there are already price increases going into 2015 that could be indicative of the supply balance outside of China.