I’m curious to hear people’s views on the lithium market at the moment. I’ve ridden the wave up, then down, and now back up again, and it’s hard not to feel like there’s a bit of a pattern forming.

My read on the last “crash” is that a wave of new supply (some genuinely low cost, some more opportunistic) hit the market at the same time inventories were building, particularly through China. Demand didn’t fall off a cliff, it just wasn’t running at the same breakneck pace, and the price corrected pretty quickly as a result.

From everything I’ve read, demand still looks structurally strong. EV adoption keeps pushing higher and lithium demand seems to keep surprising to the upside. But the price action, and the subsequent share prices, still seem to be driven more by the supply response than anything else.

What I like about Pilbara Minerals and Liontown Resources is they’re in Tier 1 jurisdictions, relatively straightforward spodumene businesses, and well managed. They feel a long way removed from what would be considered a marginal project.

What gives me pause is everything outside their control. Lithium doesn’t need demand to fall for prices to come off, it just needs supply to respond a bit too well. If prices stay strong for a period, it’s not hard to see another wave of supply coming through and putting pressure on again.

Long term, I do think these are quality businesses and will continue to perform well. But when I look at where we might be in the cycle versus how the share prices are behaving, it does feel like the market could be getting a bit ahead of itself again.

I’ve also got David Gardner’s “let your winners run” in the back of my mind, but I’m not sure how well that philosophy translates to something as cyclical as lithium.

Keen to hear how others are thinking about it.