Originally posted by Deboss
Hi
@Scarpa, I thought I had made it abundantly clear among the pigeons in the other forum how woeful and out of date a $650 LOM is, however you keep harping on that it looks like PLS LOM escarpment ...hmmm. Do note based on (I think) 540-ish LOM in 2016. Blue Ocean equity hypothesised a $300 floor in the GL/Ganfeng pricing mechanism which means basically all the margin goes to for example Ganfeng. Not hard to see the big question here for PLS holders re is battery grade China domestic lithium carbonate tracking a great idea. 2016 is not 2018 forecasting.
KDR with Roskill shows the forecast for lithium hydroxide basically rising for the next 10 years. (see pic below). Based on that it’s quite possible prices will on average keep rising.
I think it’s a wake up call to a certain lithium company that ball-chained itself to a 2016 forecast based on forecast modelers at the time and that same forecasting is now recently claimed as “too prudent” by a Platts analyst due to ev demand re-forecasting (in an interview with *.)
https://unauthorised investment advice/experts/expert-view-why-the-lithium-bubble-is-far-from-bursting/amp/ …
So you’ll see from that interview an insight stating clearly 2016 forecasting is crap......IMO it couldn't be any clearer that the 2016 forecasting is crap and stupid and is why you might say..... I’m waiting clear.png
P** may have made a mistake consequently based on the sources they used to build a consensus. I guess you need great intel to see in the future. Airguide, great intel?
Beyond the Roskill hydroxide forecast, there is likely to be new batteries requiring better material than lithium ion can cope with and, beyond NMC..... All-solid state batteries then, Lithium Air
These are the next generation game changers. None of this is forecasted for an LOM you doggedly remind of, but you would need to forecast it in along with gigafactories popping up and the only way to do that properly is meet the right people in the market.
Who has been doing that that we know of the last two years? Who has been talking with Greenpower, CATL, HuaYou, BTR, Tinci, Cinda, Chinalco, Shanshan and others?
As for Lithium ion, it may continue to hold a good share of the market (lithium carbonate relevance) as it is improving and as it displaces lead batteries on a price point.
So these current and expected battery tech developments, what it all means is, we may see further definition in pricing for different categories and quality of lithium materials. May AVZ hold a niche premium? Back in 2016 TG spodumene concentrate for $1000. I remember blastfurnace being excited about it when he thought B*S had low iron content.
At present up to 30 different lithium prices are reported. The LME is intending more transparency in this respect of pricing as well. Therefore, we could expect better definition and so better contracting........because the China domestic market is not The Swiss of definition. Battery grade gets conflated with industrial grade in China domestic market, hence potential for manipulation of prices...2018 has seen several reasons for downtrend. This is important for hard rock spod producers to get their head around when they price negotiate.
Now the $600 you mention, I haven’t seen anywhere except by way of discussions in PLS threads and even they are questioning a LOM of $650/t. Therefore you would need to quiz them about such a low price. In fact when they published the 2016 LOM it was about $540 roughly, and, did you see the comment in the footnote? It stated that the LOM is, I quote verbatim “
well below” current spot prices of about $650? So only $110 difference. So an LOM can be close to a current spot price and looking at that KDR Roskill chart, $900 LOM average for AVZ is not a bullish assumption but a reasonable forecast assumption. Bear in mind Blue ocean equity calculated a floor of $300 for PLS, so that’s close to no margin????
IMO, I am not as certain as you are that the 6% designation for spodumene concentrate is the sole criteria. We can see 6.3% for PLS second shipment but the iron is 1.12% if you can believe them. So despite the eye candy of 6.3% the iron is over 1%. It must have been hard to reduce in PLS instance as they’d be looking to superlatively impress on the initial plant commissioning.
Regarding impressions, IMO, I suspect that’s why you see a wild variance to the first shipment showing .07% iron which looks to be a political point scoring (they reprocessed it how many times to show that low iron level?) than anything to do with economies of recovery.
As for the asserted “stupid” 5.8% AVZ used in the SS, it’s just using the published MET result circuit grade in the Nagrom metallurgical testwork PDF.
And as you know more MET is underway, so yes we can expect a rerun of that % higher perhaps as high as 7%. I’m expecting 6.6% easy peasy looking at PLS recoveries.
BTW, a price reporting agency states the $10-$15 bonus starts from a minimum of 5% NOT just 6% as you state. Happy for others to check this.
On the other hand SC6 is YES the benchmark. But it all depends on ‘impurities’ and relationship with a buyer for the final haggle....clear.pngclear.pngclear.pngclear.png All IMO & DYOR
Originally posted by stakx
UBS Bullish on Lithium
http://energymetalnews.com/2018/09/...ll-continue-to-increase-well-into-the-future/
Firstly the VB tastes ok, and continues to do so. Secondly, in terms of PLS's pricing at the time they enterred the contracts my take was they did the best they could do, albeit it would be interesting what prices they are actually attaining in the now btw (but suspect some of this pricing will be based on the equity for Offtake Agreement formulas they adopted). And I don't hold PLS btw, but see PLS like Greenbushes as a main hardrock competitor.
As to some of the other points here - lithium hydroxide makes better batteries than carbonate because of the lower iron content, fullstop. But this is the crux, hydroxide prices cannot run-a-away because ultimately it is the price of the commodity and substitutes that count. At a point people re-switch if prices for one become too high, and as I asserted on this thread btw the data I was looking at showed that if carbonate prices fall, it does result in a 70% equivalent fall in the hydroxide price (i.e. if the lithium carbonate price falls by $1 the lithium hydroxide monohydrate price falls by about 70c). Again refer - Post #:
36381399
The monohydrate price is for 56.5% grade by the way and there is actually more lithium content in carbonate (refer posts above again, but would be nice to actually see some lithium hydroxide prices themselves, not to be confused with what is actually reported in the market by and large been lithium hydroxide monohydrate).
On a different matter, the iron content is actually important not just for the hydroxide market but for the technical grade lithium market. Batteries is actually chemical grade sales, but technical grade actually has lower iron content than chemical grade and can be substituted for chemical grade in any event in producing carbonate or hydroxide (i.e. that is where you also can get good premiums).
Now there are a lot of applications of lithium that are not destined for the chemical grade market that require low iron and this is where I can also see AVZ doing well. (Note: Greebushes supplies into both the technical grade and chemical grade market and because of its low iron content produces technical grade product ranging from 6.5% to 7% spodumene concentrate. That TG product can also be used for the battery market, so yes I agree and keep saying I expect AVZ to be producing grade of 6.5% and possibly higher here). Would be interesting whether AVZ have also spoken to 'potential buyers' outside the battery space as well by the way as market diversification also helps the 5mtpa and 10mtpa ore feed facility strategy IMO.
Finally, I don't mind that we differ in opinions but I will be more than happy if my viewpoints are wrong. It wouldn't be the first time I have taken a conservative approach on my views on AVZ btw as many will know here btw since last year. I have always been more conservative in my views than many posting here and the same applies here. Whether yourselves agree with me or not is fine by me, but balance on a forum is always a good thing IMO.
All IMO
