After Morgan Stanley released its forecast, lithium experts took...

After Morgan Stanley released its forecast, lithium experts took to Twitter to share their thoughts and concerns.

“Don’t usually comment on forecasts but the Morgan Stanley lithium one is ridiculous. When you understand even the basics of lithium, cathode and battery plants, and auto majors plans you realise the Morgan Stanley scenario has a 1 percent chance of happening,” Benchmark Mineral Intelligence Managing Director Simon Moores said.

In a recent research note, analysts at Benchmark explained the main factors investors should keep an eye on when discussing potential oversupply in the market.

According to the London-based firm, lithium prices are likely to move towards convergence rather than a crash, as the fundamentals of the lithium industry have not changed.

“Quite simply, to impact the battery grade lithium carbonate and lithium hydroxide prices, battery grade product has to be produced and sold to cathode and battery makers,” Benchmark said.

Lithium expert Joe Lowry also said that by predicting a steep lithium price decline the analysts at Morgan Stanley have proven they don’t understand supply, demand or the cost curve.

Energy metals analyst Chris Berry commented on the report as well, saying that there is a low probability — though not zero — for the bank’s forecast to come true.

“A LOT has to happen for this to come true: supply ramp successfully, conversion capacity ramp successfully, EV sales underwhelm, etc,” he said.

Even so, Morgan Stanley’s report boosted fears of potential oversupply in the market, with major producers’ share prices plummeting on Monday (February 26).

Chile’s SQM (NYSE:SQM) fell more than 9 percent to $53.01 in New York, as the bank cut its rating on the stock to “underweight” from “equal-weight.” Morgan Stanley also cut its rating on top producer Albemarle (NYSE:ALB), which plunged almost 8 percent to $109.18 in New York.

The Global X Lithium ETF (NYSE:LIT), which tracks the full lithium cycle from mining and refining through battery production, was also down, falling 4 percent to $35.74.