Bank Foyo: The future five years will see the lithium market continue to tighten. Ratings for American Albemarle Corporation (ALB.US) and Lithium Americas Corp (LAC.US) will be adjusted upwards.

The global lithium metal market is showing a significant bottoming rebound trend, with stock prices related to the industry chain rising strongly. As of Monday's close, the stock price of Albemarle Corporation (ALB.US) in the United States rose by 4.98%, while Lithium Argentina AG (LAR.US) rose by 7.31%, both reaching multi-year highs. Previously, Bank of Nova Scotia upgraded the ratings of two lithium producers from "in line with the industry" to "outperforming the industry," and set target prices of $200 and $7.75 respectively. At the same time, the bank also adjusted the rating of Sociedad Quimica y Minera de Chile S.A. Sponsored ADR Pfd Series B (SQM.US) to the same level and emphasized in the report that the current rise in lithium prices "is only the first round of a multi-year supply shortage cycle." Analyst Ben Isaacson of TD Bank pointed out that most of the simulated supply and demand scenarios for the lithium market at the bank point towards a tightening supply situation in the medium term - even if the growth in demand for electric vehicles is slightly lower than expected, or if the development of battery energy storage systems (BESS) falls short of expectations, the support factors for a market turning point remain strong. He further predicts that total lithium demand will reach 2.8 million tons by 2030, with a demand range of 2.5-3.2 million tons in the pessimistic to optimistic scenario; in the base scenario, the compound annual growth rate of lithium demand in the next five years is about 14%, with a range of 12%-17%. Isaacson pointed out that concerns about Albemarle's balance sheet in the US market are gradually diminishing - the company has achieved leverage optimization for the fourth consecutive quarter and is expected to achieve positive free cash flow of $300-400 million by the end of 2025 through a dual approach of reducing operating expenses and capital expenditures. With increasing visibility on the industry turning point and the continued progress of the company's self-rescue measures, the stock price is expected to see a significant uptrend. "Expected mid-2026 earnings will see substantial upward revisions, as confidence in the tightening of the lithium market is being driven by data," he added, noting that for many ordinary investors in North America, Albemarle is the "only viable large-cap stock to express a lithium view." Regarding Lithium Argentina, Isaacson pointed out: The Cauchari project produced 34,100 tons of lithium carbonate in the past year, meeting guidance and operating at an 85% rate; cash operating costs have dropped to below $6,000 per ton, allowing the business to achieve positive free cash flow at any stage of the industry cycle. The company's financial position continues to improve - it is expected that net debt will decrease by $26 million in the fourth quarter, with available liquidity exceeding $150 million; in addition, the move of Aleck Mickle to the position of president was praised as "outstanding," demonstrating the company's deep talent pool and confidence in strategic development. The analyst maintains a "in line with the industry" rating for Lithium Americas (LAC.US), while other peer companies have received higher ratings. The core logic is that the company currently has no lithium production business, no source of income, and this situation is unlikely to change in the next few years - even if lithium prices rise significantly, Lithium Americas will not benefit from it. The analyst reinforces this assessment with a sharp question: "If lithium prices soar in the next two years, why should this company receive an outperforming industry rating when it cannot participate in the price hike?"