More lithium bottom speculation? Go on then. Upward-curving contango spotted by expert
New Aussie study confirms EVs are generally more fuel-efficient than petrol or diesel models
Lithium. For better or worse, or somewhere in between, it’s still the limelight-stealing battery metal – despite a rocky time of it over the past several months for spot prices and many a related stock amid supply overstocking/weaker-than-anticipated demand in the short-mid term.
And also despite salt-based plotlines for emerging battery techs which may or may not end up reducing lithium’s usage in an energy-transformed future.
Speaking of future, or futures, though – here, look at this, from renowned lithium analyst Juan Carlos Zuleta. Well it piqued our interest today anyway…
At market close today (15:00 China time), average futures #lithium carbonate prices increased by 0.71%, exceeding average spot LC prices by CNY 3,513, & maintaining the contango process that has been going on for 20 trading days now w/o interruption. pic.twitter.com/Z3q8SHy0xv
Zuleta, by the way, has been a prominent lithium market analyst for many years, is regularly approached by leading global media outlets for his takes on lithium’s trajectory and in 2020 was appointed executive manager of Yacimientos de Litio Bolivianos (YLB), the state lithium company in Bolivia.
Bloke knows his stuff.
According to his analysis, lithium futures appear to be in the midst of “contango effect” trajectory. In fact, he’s been noticing the uptrend for a while – roughly 20 days.
Contango? Whatyoutalkin’boutWillis?
Contango refers to periods where futures contract prices rise above spot prices. The opposite of contango is known as “backwardation”. Guess contango just sounded cooler than forwardation.
In Investopedia’s words:
“Contango usually occurs when an asset’s price is expected to rise over time. That results in an upward-sloping forward curve.”
Chinese Li stock prices reacting positively to the spot #lithium price rebound right now. #BYD's stock price improvement is also contributing to this outcome. pic.twitter.com/KtOtucG8MG
You heard it here second, then. The bottom is in sight. Okay, with the door left ajar for “backwardation” – no guarantees that won’t make a swift return.
While we’re on the bottom speculation, though, Josh Chiat’s Monsters of Rock has the latest from someone/something prominent – Wilsons Advisory. And it’s worth a read. Here’s a snippet:
Corporate advisory firm Wilsons Advisory suggests we’re reaching a nadir for lithium prices, with new research showing half or more of the hard rock projects under development would not get built at current spot prices.
Wilsons says further downside to pricing is ‘likely limited’.
“Despite all the recent ‘doom and gloom’, we believe the fundamental/structural outlook remains robust, and argue that much of the recent news flow is symptomatic of a cyclical bottom in a typical commodity price cycle (i.e. low prices seeing production cuts and development deferrals); and sowing the seeds of the next price cycle,” the firm’s analysis reads.
Read Josh’s full article for more. It delves, too, into some of Benchmark Mineral Intelligence’s latest battery metal assessments, noting “there is some evidence of further supply cuts across the cobalt and nickel industries even outside of the battered Australian nickel sulphide sector”.
EVs are fuel efficient – yep, thought so
Meanwhile, in case you were in any doubt about the future of EVs, a new Aussie study backs up what most of us probably already knew – pound for pound, EVs are generally more fuel-efficient than petrol or diesel models.
A new study by financial services site MNY reveals insights on the most fuel-efficient cars in Australia, highlighting the importance of low running costs for consumers assessing the overall affordability of a car.
“Hands down, electric cars are the most fuel-efficient, even when taking into account electricity charging costs, which means those drivers will have the lowest annual power costs,” notes MNY in its report.
The 2019 Hyundai Ioniq EV sedan topped the chart with an annual fuel cost of just $491, while the 2023 Tesla Model 3 came in second, with an annual running cost of $554. The BMW i3 EV sedan was third, with $575 in annual power costs. Only one SUV made the top 10 list – the MG ZS EV, in ninth place.
“The top ten cars for fuel efficiency all have an annual fuel cost of around $500 to $700 per year, which is very low compared to the average vehicle. The savings primarily come from the fact that these cars are purely electric and do not use petrol in any form,” writes the MNY analysts.
The study does caveat the following, however:
“Most of these vehicles are also slightly more expensive than what the typical Australian consumer purchases. Therefore, accessing these fuel savings will often mean paying more money on the front end.
“These cars also trended towards smaller, lighter body styles which require less power to get going.”
“Overall, the worst performers for fuel efficiency are almost exclusively in the luxury category, wherein these vehicles are simply not built to save fuel but rather for more powerful driving experiences,” notes MNY.
Looking at fuel cost per engine type is perhaps the most relevant encompassing metric, which the study also covered, among several others:
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