Lithium price slide | Amazon drilling opposition | Real estate worries

Welcome to Portfolio Intelligence Daily, where each morning we summarize risks bubbling under the surface (i.e., supply chain disruptions; regulatory changes; reputational + ESG issues deep in supply and value chains) — and unrealized, under-the-radar investment ideas.

Today:?

• Lithium prices continue the decline that began at the beginning of the year??
• Brazil's oil company faces serious opposition to drilling at the mouth of the Amazon
• The recent turmoil in the bank sector has real estate investors worried?

Curated by Auquan’s research analyst team using our Portfolio Intelligence Engine.

Lithium prices continue to slide

Due to excess supply of lithium in China, lithium prices have been dropping, causing concern for electric vehicle growth.

• Lithium prices have been steadily falling since the beginning of the year
• The drop in lithium prices may make electric vehicles more affordable
• China's battery giant, CATL, is betting on cheaper input costs as lithium prices continue to fall
• Experts predict an excess supply of lithium in the coming years may disrupt the industry and impact lithium miners financially

Impacted companies: Lithium mining companies such as Albemarle (US), SQM (Chile), Tianqi Lithium (China), Livent Corporation (US), Ganfeng Lithium (China), and Mineral Resources Limited (Australia)

Select timeline

• March 20, 2023 | Lithium Prices Falling Behind in Electrification Goals (New York Times)
• Mar 16, 2023 | SMM Lithium Carbonate Prices Extend Slump (Metal.com)
• February 28, 2023 | Lithium Price Slide Deepens As China Battery Giant Bets On Cheaper Inputs (Reuters)

“There was a time when people believed electric vehicles would grow very rapidly, then the reality of how fast they were actually growing caught up.” — Vivek Chidambaram, the senior managing director for strategy at Accenture (source)

“Even when the price comes down from its elevated levels, there still is a very healthy profit margin.” — Shweta Natarajan, Mobility Impact Partners (source)

Tags: #lithium #mining #ESG #China #electricvehicles #sqm #tianqilithium #livent #ganfeng?#riskmanagement

Petrobras faces opposition to drilling at mouth of Amazon

Brazil's state-owned oil company, Petrobras, has encountered considerable resistance to its plans to drill at the mouth of the Amazon River.?

• Brazilian environmental regulatory agency, IBAMA, has postponed Petrobras’ exploration licence, preventing the company from moving forward with it’s plans to start drilling this month
• Indigenous groups have contested the drilling, alongside Brazil's former leftist president, Dilma Rousseff
• Brazil's Supreme Court is evaluating a lawsuit from the Workers' Party to prevent Petrobras from moving ahead with drilling.

Select timeline

• March 20, 2023 | Brazil environment agency frustrates Petrobras plan to drill mouth of Amazon (Reuters)
• March 20, 2023 | Brazil agency delays Petrobras plan to drill at the mouth of the Amazon (Seeking Alpha)?
• - 11 Mar 20 | Brazil's indigenous groups fight Petrobras' plan to drill mouth Amazon (BBC)

"There is a great potential for economic gains with the study and protection of these systems. Of course we have this immediate need for cheap energy, but how much does that sacrifice for a biotechnology-based future?" — Rodrigo Le?o de Moura, professor at Institute of Biology at the Federal University of Rio de Janeiro (source; translated from Portuguese)

Tags: #petrobras #brazil #oil #deforestation #esginvesting #drilling?

Real estate market braces for impact of banking turmoil

The recent turmoil in the bank sector has left real estate investors worried about a liquidity squeeze, which is causing cracks in the foundation of the property market.?

• The collapse of banks like Silicon Valley Bank is a looming concern for real estate developers?
• There are concerned about a liquidity squeeze for commercial real estate capital markets
• The bank crisis is causing instability in the property market, much of which relies on regional banks

Select timeline

• March 20, 2023 | Real Estate Investors Brace for Liquidity Squeeze Amid Bank-Sector Turmoil (Wealth Management)
• March 16, 2023 | Bank crisis adds a fresh crack in property's foundations (Wall Street Journal)?
• March 16, 2023? | Silicon Valley bank collapse 'definitely' impact real estate, developer warns (Fox Business)

“After the closures of SVB and Signature Bank, it seems almost inevitable that CRE credit spreads will increase and lending liquidity will decrease over the short run. However, there are still several questions that don’t have an easy or immediate answer, such as whether lending liquidity is drying up, how lending spreads are reacting, and how long this fallout will last.” JP Verma, senior product director, banking solutions at Trepp (source)

"People, in general, are worried. As we were talking about the regional banks, that's a major issue. We're developers, and so, a lot of our construction financing comes from regional banks… the impact of the fallout here of something like this happening with the regional banks is definitely a large concern." Dan Kodsi, CEO of Royal Palm Companies (source)

Tags: #svb #siliconvalleybank #banking #bankcrisis #realestate #commercialrealestate #reit #stocks #portfoliomanagement #capitalmarkets

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