Over recent days, I’ve considerably increased the lithium and uranium positioning in my portfolio.
Why? One word. Seasonality.
Markets for resource stocks have been weak over the past few months. I’ve flagged on social media and in my Q2/26 RK Equity quarterly presentation that I felt that the fundamentals for lithium were intact, if not actually improving.
Lithium fundamentals improving
Depending on which weekly inventory series you follow for lithium carbonate, Chinese inventories are down 19-25% since the end of April. In days of consumption terms, the fall is even more profound, from c.27 days of demand in April, to c.22 days now, and that’s also down from 55 days in April 2025.
It’s been a mixed year for end market demand in key lithium-ion battery sectors, but there are signs of improvement now and, in my view, that can only tighten the raw materials market. I went into this in detail in my quarterly presentation, so I’ll only summarise the key points here:
- EVs: China EV sales remain weak (down for the year) but ROW and Europe are offsetting this weakness and global sales for the year to June are up 2%, with the sales mix increasingly improving for BEVs vs PHEVs, which has a substantial impact on average battery size and hence raw materials demand.
- ESS: Global installation growth, while positive has been a little subdued in the first half, but there are signs now that it’s beginning to improve. Production of ESS cells is still growing very fast. With the acceleration in installation growth, I’m less worried about cell inventories in this segment than I have been.
Near-term outlook: To be fair, some risks remain in lithium. Mine restarts in Australia and Brazil, plus the resumption of exports from Zimbabwe, more DSO material, and the will-they/won’t-they restart of CATL’s Jiangxi lepidolite mine all constitute supply risks from the fourth quarter onwards.
But seasonality is supportive of fundamentals. In recent years, there has been a strong restocking cycle in lithium in August-October and, if that happens again, into a market with depressed inventories, we could very well see another spike in lithium prices like we saw towards the end of last year.
While technical analysts have flagged the China GFEX lithium price flirting with (even breaching) a core support level at CNY140,000/t, in this instance I believe that fundamentals may win out over technicals. That is not always the case, but with the broader market sell-off stabilising in recent days, I believe that it may be the case here.
Add the fundamental indicators to an environment where a broad-based macro sell-off in equity markets has knocked many lithium stocks down 40-50%, and I think lithium equities are set up for the perfect storm over the next few months. And that’s why I’ve been adding to my lithium holdings over the past few days.
Uranium is seasonally strong in September
OK. First up. I’m not an expert on Uranium. I’ve tracked that market for over 15 years now. Sometimes I’ve made money on it, sometimes not. I’m aware of the prevailing bullishness which highlights that the market is structurally undersupplied and that long-term prices are on a structural uptrend.
But I’m also aware of the fact that, despite that unchanged excitement on the long-term outlook, after the last upcycle in 2023, spot uranium prices gave up most of their gains in 2024, and have been pretty unexciting thus far in 2026.
But there is one factor about uranium that stands out for me; seasonality.
Uranium spot prices (and by extension, stocks) normally have a strong run around August-October. Why? Because the World Nuclear Association has its annual Symposium in September and you normally get a lot of supply/demand and pricing data around the margins of that conference.
And that tends to translate into pretty reasonable stock price performance. So that’s why I’ve been buying uranium stocks and ETFs.
Critical Materials like the baby thrown out with the bathwater
As I flagged in my quarterly presentation, the Mining space in general and the Critical Materials space in particular has kind of been carried out by the market during the macro sell-off. There is widespread concern that Hyperscalers may not be able to Hyperscale and this seems to have had a knock-on effect on all segments exposed to that trend.
While I’ve mentioned lithium and uranium in this article, they are by no means the only Metals segments that – to me – look oversold in this market. I have flagged Rare Earths, Nickel and Aluminium in social media posts over the past few weeks, and those segments also look attractive to me.
And there is a long-term seasonal trend in the Metals sector. It’s known by analysts as “Sell in May and go Away”. The “Go Away” in this case, being til Labor Day in the US, which this year takes place on 7 September.
If you’d sold metals at the start of May this year, you would have avoided quite a lot of pain. My gut feeling is that the sector will bounce before Labor Day this year after selling down so strongly in June and July.
So I think that the whole of the Metals complex could bounce on seasonality this year, but I believe that Lithium and Uranium could outperform the rest of the pack.
Disclosure: The author holds investments in lithium- and uranium-related equities and/or ETFs. This article reflects personal opinions and is provided as general market commentary, not company-specific research or personalised investment advice.
