It appears that the only operations currently scaling back are small, high-cost, non-integrated spodumene producers. For example, CXO halted production at 90 ktpa of spod when they entered C&M, and Mt Cattlin is currently producing about 100 ktpa. Combined, that's 190 ktpa of spod removed from the market, equivalent to about 25 ktpa in LCE terms.
However, a significant amount of new supply is about to hit the market, with 500 ktpa from Kathleen Valley (LTR), 380 ktpa from Mt Holland (WES/SQM), and an additional 100 ktpa from PLS' P680 expansion at Pilgangoora. This adds up to a total of 980 ktpa of spod coming online imminently, just from Australia. In lithium chemical terms, this is equivalent to an additional 130 ktpa LCE entering the market over the next 12-18 months, just from Australian spod.
The problem is that there's five times more spod entering the market than is being removed, which doesn't bode well for addressing the supply/demand imbalance. In the longer term, while Arcadium's decision to delay their Galaxy Project (James Bay) might have some impact, it pales in comparison to the potential increase in supply if PLS moves forward with their P2000 expansion, or if SQM/Hancock push ahead with the Andover resource.
In the Argentina brine space, several new projects are being commissioned, including 40 ktpa LCE from Cauchari-Olaroz (LAAC/Gangfeng), 24 ktpa LCE from Centenario Ratones (Eramine), and 24 ktpa from Sal de Oro (POSCO). These three projects alone will add around 100 ktpa LCE to the market, while the only brine project I've seen enter C&M is AGY, which only removes 2 ktpa of potential product from the market. That's before we even consider Arcadium's ongoing production expansions in Argentina:
As you can see, it would take a significant number of companies halting operations to shift the balance. Even with small pullbacks here and there, like we're seeing now, the market is still being heavily influenced by major producers introducing more supply in the short term.
