Pilbara, an Australian lithium miner, held the first lithium concentrate auction in 2022 on April 27, Beijing time, with a transaction price of US $5650 / ton Shanghai Ganglian E-Commerce Holdings Co.Ltd(300226) data show that the average spot price of spodumene concentrate was 3800 US dollars / ton on April 27. The “sky high price” of US $5650 / ton in Pilbara is far higher than the current market quotation and a record high.
This is the fourth time that Pilbara mining has put lithium concentrate on the auction table. Affected by the news, A-Shares reappeared the “rise with lithium” market on April 27. Lithium concept stocks rose by the limit in a large area, and the relevant sectors were almost red across the board.
The auction totaled 5000 tons, lower than the scale of the previous three auctions. According to the calculation of Longzhong information, combined with the freight of US $90 / ton, the cost of lithium carbonate is about 380000 Yuan / ton.
Australian lithium mines are mostly supplied to the downstream in the form of long-term agreement, and there are relatively few spot minerals available for circulation. In 2021, Pilbara, the main lithium miner, successively auctioned lithium concentrate in July, September and October to sell lithium concentrate outside the long-term association, with high prices of US $1250 / ton, US $2240 / ton and US $2350 / ton respectively.
Minsheng Securities said that previously, the market had unanimously expected the auction price to be more than $5000 / ton. The second quarter lithium concentrate guideline price of $5000 / ton given by Galaxy resources, another Australian lithium mining enterprise, was higher than the guideline price. This shows that the industrial chain is optimistic about the forward price and demand judgment. In the future, the price of lithium will be supported on the cost side with little downside space.
However, affected by the epidemic and other factors, China’s lithium price has recently suffered a “Waterloo”.
data show that the price of battery grade lithium carbonate continued to fall after hitting a record high of 500000 yuan / ton in March this year, ending the rapid rise for seven months
Luo Xiaoli, an analyst at Longzhong information lithium industry, said that under the guidance of relevant meetings on policy, downstream enterprises refused to accept high price sources, the manufacturer’s sales model changed, and a large number of traders sold goods at low prices. Under the influence of many factors, the price of lithium carbonate fell under pressure.
“Pilbara’s auction price will undoubtedly inject a strong reassurance into the market. Limited by the volume of goods, although the auction price has little guiding significance for the overall market, it will boost market sentiment.” Luo Xiaoli said, “due to the weakness of terminal demand, the lithium market price still has no upward momentum in the short term. For lithium salt enterprises, the game time between the supplier and the demander will be prolonged, and the enterprise’s confidence in supporting the price will be strengthened. It is suggested to focus on the resumption of production and demand recovery of lithium salt terminals.”
Minsheng Securities said that the second quarter is the off-season of the lithium industry over the years, and the price usually goes down. The current epidemic affects downstream production and transportation, while the lithium price is still relatively stable on the whole, and there is no cliff like decline. It is expected that after the epidemic situation improves, downstream enterprises will resume production, and the price is expected to stabilize at a high level under the support of cost. In the long run, lithium supply and demand remain in tight balance.
The report provided by standard & Poor’s global commodity watch recently shows that the market believes that lithium prices have strong support, and the growth rate of demand far exceeds that of supply. This situation is not expected to change in the short term, and prices are expected to continue to rise in the future.
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