Why Wall Street banks have got it wrong on lithium

The market’s bearish forecast of a chronic oversupply of lithium is wrong, according to one major fund manager which expects an emerging deficit in the green metal.

Ethical Partners’ proprietary model suggests the global market for lithium is moving “rapidly back” into balance and could even be undersupplied – at odds with the view of major investment banks including Goldman Sachs and Citi.

Ethical Partners’ data is based on company filings, including during the earnings season, where almost all Australian lithium miners adjusted their production outlooks, and multiple one-on-one meetings with the producers globally to hear “from the horse’s mouth” about plans to limit production and other cost-cutting measures.

“Since November, we believe the lithium market has moved from an 8 per cent surplus in 2024 to roughly in balance,” said Sam Cox, an analyst at Ethical Partners.

“While demand will still be a key driver of price direction from here, we see green shoots … The market has yet to identify this trend, and is still looking backwards.”

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