Good News & Bad News, page-1220

Markets are skittish at present, some heat out of the broader markets would be healthy IMO.

However, the pure lithium plays are hanging strong, sector funnymentals are strong, hydroxide prices nudged up last week, and now trading at a premium to carbonate, while carbonate prices are stable. TBTH, I can tolerate an sp rise of 1 to 2 cents per day, now up 27 cents over past fortnight.

Battery grade hydroxide for the first 4 months of 2021, total output of high nickel materials has accounted for ~33% market share, up from 22% in 2020. The output for high nickel materials in April 2021, was up 310% y-o-y, evidenced by premium over carbonate pricing. I expect this trend will continue, and will pull spod prices up with it.

Raw material producers are advising downstream customers they cannot supply contractual tonnes, so some are missing out. I believe this would be SA brine producers, who may of signed offtake contracts in line with expansion plans back in 2019, but hey, C-19 did a good job of messing with those plans.

Oz hard rockers are keeping it very tight, not giving anything away, from the perspective "there is" latent supply available in WA (see Wogina, the Ngungaju Plant and probably some capacity from GB's) however, that's all flagged for onshore downstream processing and the BMX platform, once again, keeping it tight. Wrt to the GB's spod production, it would difficult for Tianqi to flood Chinese market with spod, now that IGO are coming onboard, not to mention ALB's 49% influence.

So we have a genuine bottleneck all the way upstream at the miners, while there is spare lithium chem conversion capacity in China, so thankfully, dfs1 not a repeat of lithium chem conversion bottlenecks in China which we experienced in 2018/19 .

The EU does not have any producing mines for raw material feed, US in same boat, and both want to build out chem conversion capacity. However, before they get a ticket to build, they need to secure raw material feedstock, but from where? Can they raise capex needed to complete their build out before they secure raw material feedstock? Maybe yes, but higher risk relying on non-producing and unqualified mining operation to feed your $1.2 billion investment.

Very interesting times, and I expect Oz to take some market share away from China in the next few years, and because China only source ~20% of their lithium raw feedstock domestically, they will need to be on their best behavior, while also paying up.