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Bullish Views Power Long-Term Lithium ETF Prospects
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Despite the recent price drops triggered by concerns about a slowdown in electric vehicle (EV) demand, the world's leading lithium producers maintain their optimism about long-term demand for the battery material.
EV manufacturers and battery producers have downgraded their demand projections for 2024, driven by rising interest rates and an uncertain global economic landscape. According to Reuters, the lithium price basket, which is subject to regional and type variations, as monitored by Benchmark Mineral Intelligence, has witnessed a decline of over 60% in the current year, raising concerns over the profitability of battery manufacturers.
Current Market Sentiment
Despite forecasts of higher demand for the ultralight battery metal in the current year compared to 2022, the industry’s optimistic growth projections have been dampened by gloomy quarterly results. Pilbara Minerals, an Australian lithium mining company, is the most heavily shorted stock on the Australia Stock Exchange. Australia, the global leader in lithium production, gives a pessimistic view of the metal’s demand.
As per the Reuters article, lithium producers, in recent conversations with investors and analysts, view market volatility as a short-term concern, expressing confidence in the continued expansion of electrification.
Livent , the supplier to the likes of BMW and Tesla (TSLA - Free Report) , remains optimistic about robust lithium sales, despite reporting underwhelming financial results.
Impact of EV Demand
Lithium is essential in manufacturing lightweight, high-energy batteries. EVs rely on lithium batteries, and the EV market continues to witness substantial annual expansion, boosting the outlook of the lithium market.
However, lower demand projections by EV makers fueled by high interest rates and uncertain global economic conditions make the short-term outlook of the lithium industry gloomy.
Despite this, a global shift toward EVs is inevitable, boosting the long-term prospects of the market. Revenues in the United States are projected to see a CAGR of 18.17% from 2023 to 2028, amounting to a projected market volume of $161.6 billion by 2028, according to Statista.
Growth Projections
According to Fortune Business Insights, the global lithium market was valued at $37.8 billion in 2022 and is estimated to witness a CAGR of 22.1%, from $22.2 billion in 2023 to $89.9 billion in 2030.
As per Forbes, according to analysts’ projections global lithium production is forecast to reach 1.17 million tons in 2024, up from the 2023 level of 964,000 tons.
ETFs in Focus
With the shift to EVs imminent in the long-term, the sustained demand for lithium remains optimistic. Investors with a longer investment horizon can invest in lithium ETFs to tap into the outlook of the metal. While falling prices remain a short-term hurdle in the market, a broader historical perspective reveals that lithium prices have been on an upward trajectory.
Global X Lithium & Battery Tech ETF seeks to track the performance of the Solactive Global Lithium Index with a basket of 40 securities. The fund has gathered an asset base of $2.13 billion and charges an annual fee of 0.75%.
Global X Lithium & Battery Tech ETF has an exposure of 41.3% and 19.5% in China and the United States, respectively. The fund has lost about 29.36% over the past year. However, the fund is up 0.9% over the past three year.
Amplify Lithium & Battery Technology ETF seeks to track the performance of the EQM Lithium & Battery Technology Index with a basket of 111 securities. The fund has gathered an asset base of $110.7 million and charges an annual fee of 0.59%.
Amplify Lithium & Battery Technology ETF has an exposure of 28% and 19% in China and the United States, respectively. The fund has lost about 14.64% over the past year and 1.03% over the past three years.
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Bullish Views Power Long-Term Lithium ETF Prospects
Despite the recent price drops triggered by concerns about a slowdown in electric vehicle (EV) demand, the world's leading lithium producers maintain their optimism about long-term demand for the battery material.
EV manufacturers and battery producers have downgraded their demand projections for 2024, driven by rising interest rates and an uncertain global economic landscape. According to Reuters, the lithium price basket, which is subject to regional and type variations, as monitored by Benchmark Mineral Intelligence, has witnessed a decline of over 60% in the current year, raising concerns over the profitability of battery manufacturers.
Current Market Sentiment
Despite forecasts of higher demand for the ultralight battery metal in the current year compared to 2022, the industry’s optimistic growth projections have been dampened by gloomy quarterly results. Pilbara Minerals, an Australian lithium mining company, is the most heavily shorted stock on the Australia Stock Exchange. Australia, the global leader in lithium production, gives a pessimistic view of the metal’s demand.
As per the Reuters article, lithium producers, in recent conversations with investors and analysts, view market volatility as a short-term concern, expressing confidence in the continued expansion of electrification.
Livent , the supplier to the likes of BMW and Tesla (TSLA - Free Report) , remains optimistic about robust lithium sales, despite reporting underwhelming financial results.
Impact of EV Demand
Lithium is essential in manufacturing lightweight, high-energy batteries. EVs rely on lithium batteries, and the EV market continues to witness substantial annual expansion, boosting the outlook of the lithium market.
However, lower demand projections by EV makers fueled by high interest rates and uncertain global economic conditions make the short-term outlook of the lithium industry gloomy.
Despite this, a global shift toward EVs is inevitable, boosting the long-term prospects of the market. Revenues in the United States are projected to see a CAGR of 18.17% from 2023 to 2028, amounting to a projected market volume of $161.6 billion by 2028, according to Statista.
Growth Projections
According to Fortune Business Insights, the global lithium market was valued at $37.8 billion in 2022 and is estimated to witness a CAGR of 22.1%, from $22.2 billion in 2023 to $89.9 billion in 2030.
As per Forbes, according to analysts’ projections global lithium production is forecast to reach 1.17 million tons in 2024, up from the 2023 level of 964,000 tons.
ETFs in Focus
With the shift to EVs imminent in the long-term, the sustained demand for lithium remains optimistic. Investors with a longer investment horizon can invest in lithium ETFs to tap into the outlook of the metal. While falling prices remain a short-term hurdle in the market, a broader historical perspective reveals that lithium prices have been on an upward trajectory.
Below, we highlight a few lithium ETFs.
Global X Lithium & Battery Tech ETF (LIT - Free Report)
Global X Lithium & Battery Tech ETF seeks to track the performance of the Solactive Global Lithium Index with a basket of 40 securities. The fund has gathered an asset base of $2.13 billion and charges an annual fee of 0.75%.
Global X Lithium & Battery Tech ETF has an exposure of 41.3% and 19.5% in China and the United States, respectively. The fund has lost about 29.36% over the past year. However, the fund is up 0.9% over the past three year.
Amplify Lithium & Battery Technology ETF (BATT - Free Report)
Amplify Lithium & Battery Technology ETF seeks to track the performance of the EQM Lithium & Battery Technology Index with a basket of 111 securities. The fund has gathered an asset base of $110.7 million and charges an annual fee of 0.59%.
Amplify Lithium & Battery Technology ETF has an exposure of 28% and 19% in China and the United States, respectively. The fund has lost about 14.64% over the past year and 1.03% over the past three years.