Lithium prices have seen a downturn in recent months, but Argonaut's Hayden Bairstow remains optimistic about the long-term prospects for the sector. Despite a seasonal lull and volatility in prices, Bairstow believes the fundamentals remain strong. He predicts that spodumene prices, which have dropped below US$1700/t, will rebound to a range of US$1800-2500/t in the coming months. Bairstow notes that demand is seasonal and that the current weakness is partly due to China's Golden Week holiday, after which he expects prices to stabilize.
The demand for lithium is driven by two main sources: electric vehicles and battery storage. While EV sales have seen a 5% year-over-year increase, battery storage demand has been more volatile, with significant spikes in certain months. Bairstow points out that supply is not keeping up with demand, particularly in Argentina, which he believes will disappoint. This supply-demand imbalance could make lithium producers appear 'extremely cheap' as prices trend back up.
Argonaut has also increased its long-term copper price forecast by 9%, citing improving fundamentals. Bairstow highlights the growing demand for copper in data centers and AI, along with supply constraints in Chile. Among his top picks are Kantra Copper, with a price target of $2.40, and other developers like Wildcat Resources and PMET Resources, which are expected to start production this decade.