While 2019 was a challenging time for lithium producers and explorers due to surplus production, increasing inventory levels and weaker than anticipated demand from China, there are hints that 2020 might be more positive.

In its quarterly report, Galaxy Resources (ASX:GXY) said the outlook for 2020 remained positive and that for the mid-term through to 2025 continued to be very robust.

The company noted that while China and the US reported declines in the sales of electric vehicles (EVs) in 2019, EV sales in Europe rose 43 per cent year on year to about 579,000 vehicles.

Additionally, China has flagged that it does not plan to cut subsidies for EVs again in July 2020 and has also reiterated its desire to reach a 25 per cent penetration rate by the year 2025.

This year is also expected to be a breakout year for global EV releases with multiple new models set for introduction from many of the world’s traditional auto-manufacturers.

Galaxy said that while lithium prices were expected to remain subdued throughout the first quarter of 2020, it expected demand to start recovering after the Chinese New Year.

This optimism comes at a good time for Core Lithium (ASX:CXO), which intersected high-grade lithium that could drive a resource upgrade for the Carlton prospect, part of its Finniss project in the Northern Territory.

Drilling outside the current resource of 1.09 million tonnes grading 1.3 per cent lithium oxide (Li2O) yielded top hits of 5m at 2.69 per cent Li2O from within a broader interval of 32m at 1.52 per cent Li2O, 35m at 1.32 per cent Li2O and 14m at 1.4 per cent Li2O.

The work has identified two spodumene bodies at Carlton, which remains open to the south and at depth.

Core is currently considering the inclusion of Carlton in the development schedule for Finniss, which is close to securing mine and processing approvals.

Finniss is just one hour by sealed road from Darwin and just 25km from port, power station, gas and rail infrastructure.

Like Galaxy, Core is also upbeat about the lithium sector, with managing director Stephen Biggins saying that renewed Chinese government support for the EV industry could strengthen Asian EV sales alongside growing European demand.

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