Lithium on the Rebound. Here’s How to Trade It Now.

May 17, 2023
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Lithium prices are on the rebound.

After a brief pullback, the supply-demand issue is forcing lithium prices higher again. Even analysts at Citigroup just said the collapse in lithium price is likely to be over, and prices could rebound by as much as 40% by the end of the year.

The firm added: “Chinese lithium carbonate prices plunged around 70 per cent in just five months to a low of $US22,000 a tonne, but have since recovered to $US28,000 a tonne in the last few weeks. Citi attributed the rebound to improved market sentiment, demand from physical traders, recovering EV sales and lower inventories in the supply chain,” as noted by Financial Review.

Even better for the lithium miners, Baird just upgraded Albemarle to Buy from Hold, with a price target of $288 from $222 a share. “Demand for lithium, which is critical to making the batteries that power electric vehicles, isn’t slowing down,” added the firm.

One way to trade the recovery in lithium is with the industry’s 800 lb., oversold gorilla Albemarle (ALB), which is just starting to pivot higher. Or, look at Lithium Americas (LAC), which is working with General Motors on its Thacker Pass mine, and which just received federal clearance with the mine.

Or, look at ETFs for diversification at lower cost, such as:

Global X Lithium & Battery Tech (LIT)

With an expense ratio of 0.75%, the LIT ETF invests in the full lithium cycle, from mining and refining the metal, through battery production. Some of its top holdings include Albemarle TDK Corp. Panasonic, BYD Co., Tesla, Livent Corp, Piedmont Lithium, and Standard Lithium.

Amplify Lithium & Battery Technology ETF (BATT)

With an expense ratio of 0.59%, the BATT ETF provides exposure to global companies deriving material revenue associated with the development, production and use of lithium battery technology. Some of its top holdings include Tesla, LG Chemical, Albemarle, Sociedad Quimica y MInera, Panasonic, BHP Group, and BYD Company to name a few.

KraneShares Electric Vehicles and Future Mobility ETF (KARS)

The Krane Shares Electric Vehicles and Future Mobility ETF (KARS) is starting to accelerate, too.
With an expense ratio of 0.70%, this ETF provides exposure to companies involved in the production of EVs and their components.