Stocks - Lithium Industry - Global Overview and Perspectives |
- Lithium Industry - Global Overview and Perspectives
- If all companies were suddenly reset to "fair value", which company would you want to buy?
- Mindfulness and emotional trading
- Apple / AAPL - short term outlook
- How Should I diversify myself?
- YTD performance Amazon vs Microsoft, Google, Apple and Facebook
- How do you guys organize your research?
- Wash Sale Rule Question
- The case for XLP (ETF)?
- Concerned question about tax’s
- Executives, Market Makers and Finra Questions
| Lithium Industry - Global Overview and Perspectives Posted: 12 Dec 2021 02:19 AM PST Following Chamath Palihapitiya's publication of his investment thesis on Mitra Chem, I wanted to share some of my writings on the lithium industry in a similar format (1-pager). I also believe that, amid growing concerns over the Omicron variant and faster-than-expected tapering, here is now the best period to get knowledge about secular growth and megatrends, and position I've been interested in this industry since early 2021 and I found it appealing from both a top-down and bottom-up perspectives. I will not share any view on specific stocks but I must report that I do own shares in Albemarle and SQM since early 2021. Actors
The five first mentioned lithium producers above account for 80% of the annual global production of lithium. * raw resource mined to produce lithium carbonate or hydroxide Global Environment
Drivers, Expectations and Opportunities
Headwinds
After some research, here are potential answers to some headwinds mentioned above: Lithium Price Sustainability and Impact on Producers Lithium pricing has rallied more than 300% YTD on average, with carbonate and hydroxide now trading above $33'000 a metric ton in the Chinese spot market, while the historical EV demand period in November/December did not materialize yet. Contrary to 2017-2018, demand for lithium is expected to outstrip production for at least the next five years with few new mining projects on the horizon. Therefore, it raises the question of price sustainability over time and the impact on the expected EV price parity with ICEs to be reached in 2025-2026. An argument in favor of pricing going down in the coming years is the expected increased competition leading to additional supply over time. At the current levels, every lithium project is profitable and an industry growing 25-30% with EBTIDA margins close to 35%-40% should attract competition. The risk of lithium oversupply in the future with additional supply coming faster-than-expected should not be overlooked. Nevertheless, even with prices going down and reaching more sustainable levels around $12'000-$14'000, they will remain well above the contract prices currently negotiated between lithium producers and their customers. For instance, SQM reported recently its 3Q21 results and mentioned that most of their lithium contracts would be renegotiated over 4Q21/2022. The Co guided to a +50% price increase in 4Q21, from $8'200/t in 3Q21, and an even higher price increase over 2022. Additionally, it is worth noting the pricing model of lithium producers. Most of them are using a hybrid model where 70-80% of the contracts have embedded fixed prices while the rest is based on variable prices. They are negotiated over 3-5 years on average, implying a lag between spot pricing and contract pricing. With the sharpe increase in lithium spot price, lithium outlook and the urgent need for their clients to secure enough supply (whatever the cost?), producers are now in a superior position where they can negotiate a hybrid model with 1. a much higher embedded fixed price and 2. more contracts based on spot price, further improving margins. Battery Technology Battery chemistry is in constant evolution and is a key driver for carbonate, hydroxide or lithium metals demand shift. Whilst the market was expecting lithium hydroxide to become more dominant because of its higher density property, we observed over the last few months the resurgence of LFP batteries and, consequently, the surge in demand for lithium carbonate. It explains somehow the current discount of lithium hydroxide vs. carbonate in the Chinese spot market. According to OEMs statements, demand for carbonate, hydroxide or lithium metals will be dependent on OEMs targeted markets with China/Europe supporting demand for carbonate and the USA preferring hydroxide. Lithium producers, like Albermarle, able to produce lithium carbonate and having downstream processing capabilities to produce lithium hydroxide will definitely have an edge here thanks to their flexibility. Increased ESG, global supply chain disruptions and labor shortages The lithium industry is facing challenges from increased ESG requirements. Many producers already committed to reduce their water consumption over time but more efforts could be expected from OEMs to end-users, leading to additional costs. Requirements for a "greener a cleaner" lithium production are likely to intensify in the coming years, especially if the EV industry wants to prove it is effectively cleaner than ICE vehicles. Here again, I do believe there are opportunities for both the US and Europe to develop both upstream and downstream capabilities as local supply chains mean lower carbon footprint. The industry is also not immune to supply chain risks and suffered recently from COVID-19 issues and labor shortages. Supply chain risks are the biggest challenge currently faced right now, according to Albemarle, as producers must take care of delivering the products on time. The vaccination rollout, despite the Omicron variant virus, should ease the strain on the supply chain over time. Alternative lithium extraction: DLE Direct Lithium extraction is an innovative environmentally-friendly technology working as a substitute of lithium production from brines with evaporation ponds. It presents many advantages, including global costs, strong reduction in water usage, and bringing at a much faster pace battery grade lithium to markets. However, the DLE solution cannot be implemented everywhere. The technology still has to prove itself and should be seen as a complementary solution to produce lithium carbonate. Recycling Recycling has been a focus area within the lithium industry because we believe the environmental footprint of recycling is less important than directly mining lithium or producing it through brine. However, recycling is highly dependent on the lifespan of EVs batteries, currently estimated to be around 10 to 15 years. Lithium coming from recycling would therefore ramp up in 2030-2035. Here are my findings/research, I hope it will help you getting a better overview of this industry and catching potential opportunities. I do believe climate change is full of opportunities and lithium is one of them. There are plenty of ways to play this thematic, from lithium producers to companies dedicated to recycling. Investing in EV producers is another solution but I find it very difficult to pick the EV producer that will prevail in the coming years. Looking forward to discussing with you your views on the lithium industry! Cheers! [link] [comments] |
| If all companies were suddenly reset to "fair value", which company would you want to buy? Posted: 11 Dec 2021 10:00 PM PST Without getting too caught up in what "fair value" would be, the point of the question is to ask what company you'd invest in if the price wasn't wildly above what you think would be fair. Please list reasons why you chose that company :) (try not to list more than 3) [link] [comments] |
| Mindfulness and emotional trading Posted: 12 Dec 2021 04:35 AM PST For the most part, everyone knows that emotions are a disaster for consistent trading, but in my experience the vast majority of new traders have no idea how much emotion is actually behind their actions. So try something- pull up a mindfulness meditation video on YouTube and for 5 or 10 minutes, focus on your breathing and pay attention to how calm and centered your entire body becomes. When you make a trade, this should be your state of mind. If it isn't, then you are potentially (read: highly likely) in a fight or flight mindset, and cannot make a logical, unbiased decision. There should be no dreams of riches and no painful memories of losses, just raw numbers on a screen that mathematically mean something for your trade. If you struggle with consistency or feel emotionally drained from trading then I would highly recommend finding your emotional balance before anything else, you might surprise yourself with the results. [link] [comments] |
| Apple / AAPL - short term outlook Posted: 12 Dec 2021 06:20 AM PST Unless you have been living under a rock you have watched Apples insane run up the past few weeks. In the past month Apple has increased 20.7% with Fridays close. I have been investing in Apple since 2019 and have accumulated a good amount of shares and option contracts. I understand "you don't trade Apple" but I am curious to hear others sentiment towards the stock. Apple is sitting on a lot of cash, inflation is here, interest hikes are in the distance, AR and EV rumors have been mentioned, price upgrades have been released, Apples super cycle is clearly underway.. Where does Apple seem to be heading from your experience? Are we in for some more short term upside as the holiday quarter continues into earnings late January? Will Apple lose steam and stabilize a bit lower? Or maybe Apple and the other high fliers in a volatile market will soon catch up to the broader market? Of course we are no fortune tellers- but I am looking for some thoughts in regards to Apple demonstrating serious strength in the past month. Is 3 trillion coming soon? What do you think?! [link] [comments] |
| How Should I diversify myself? Posted: 12 Dec 2021 03:39 AM PST 25/M Which Stocks Should I Diverse My self with The $8000 I have? The only Stock I currently hold is a cannabis penny stock which is actually going in the right direction I see and has turned itself around well… Aside from that: I want to Diversify myself I was looking at AAPL NVDA MSFT AMD F and visa or Mastercard… Id be interested in those but suggestions are welcome! I only have 30k CAD on hand now that I want to hold on to… so I have $8000 USD right now ready to put to work! Im okay with risk, volatility doesnt cause me to get emotional and panic sell. Young and ready : got time on my side lol I just dont know how I should diverse this up… ETFS are the obvious if unsure ik but for now Id like to purchase equities… I think 4-5 would be best? I just bought a 1.1 acre commercial plot of land in a growing community so for the time being my fund replenishment is gonna take some time to get back to where I was, but I plan for the time being on loading up the stocks as much as I can! I live at home with parents just as an fyi, working towards increasing income Thank you for your suggestions/comments and help! I really appreciate it!!!! [link] [comments] |
| YTD performance Amazon vs Microsoft, Google, Apple and Facebook Posted: 12 Dec 2021 06:46 AM PST Since it is almost the end of the year, it is time to check the ytd performance for MAMAA. This year Google ytd gain is 69%, Microsoft 54%, Apple 35%, Facebook 21%, and Amazon 6%. Microsoft and Google outperformed spy etfs and rewarded investors nicely ytd. Is there any specific reason why Amazon is still underperformed to other big techs and spy etfs? Even the most hated Facebook stock is performed much better compared to Amazon ytd. I am still holding Amazon since September 2020, and hopefully the Santa Rally could help Amazon to break ath again. [link] [comments] |
| How do you guys organize your research? Posted: 12 Dec 2021 06:41 AM PST Hello everyone! Title says it, i wonder how you guys organize your research. How do you structure your files / folders? What software/apps do you use? (notetaking, bookmarking, etc) How do you stay up to date with companies ? (earning calls, reminders/calendars, etc) Any other useful advice / tips ? [link] [comments] |
| Posted: 12 Dec 2021 06:53 AM PST Say I bought 1,000 shares at $100. Then I buy 100 more shares at $110. I finally sell all 1,100 shares at $105, so total gain of $950. If I buy back the stock within 30 days will the Wash Sale Rule apply to those 100 shares? [link] [comments] |
| Posted: 11 Dec 2021 08:17 PM PST Hi all, my first time posting here, so apologies in advance if my question is not good. I am thinking of investing in XLP (an ETF which tracks US staples stocks like P&G and Costco). Do you all think this is a good move as compared to VOO? I looked online, apparently XLP beats VOO for 15-year returns, but loses to VOO for 3 and 5-year returns. Appreciate hearing from you guys! [link] [comments] |
| Concerned question about tax’s Posted: 11 Dec 2021 10:53 PM PST Hypothetically if I make one hundred dollars off of a starting point of ten dollars then sell my stocks and reinvest the one hundred dollars into something else and lose eighty dollars , leaving me with only twenty dollars. Would I still pay tax if it overall resulted in a loss in my account? [link] [comments] |
| Executives, Market Makers and Finra Questions Posted: 12 Dec 2021 05:10 AM PST Hi everyone, currently I'm trying to get a few pieces of data for just general DD bullet list and i ran into a wall block, please help if possible Here's what i want to find : With Jumia I wanted to know how are the executives/the top management or CEO's payed and as much as i tried to find that and search it on google it doesn't show up, their insider holdings are incredibly small too so its kinda weird to me. Then I also wanted to find a way to search who is the market maker for said stock, how would i find the jumia MM or any other stock Lastly i been trying to piece and get to know the full weekly/monthly traded volume for any stock, i understood I could find this on FINRA but the website is so confusing to me so forgive me for not knowing how to navigate it but even when i found a way as in this link which I found in a post in regards of amc, i tried doing the same thing as in the post and look for the amc traded volume, the symbol just never shown up for me, just like trying to find the short volume for any stock on finra [link] [comments] |
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