Everyone it waiting for ex-China conversion capacity to come on line, that will bump the demand pull a lot through 2030. Yes, said demand from other regions will be incremental at first, but its on the way.
For example, by 2030 the US and EU will each need somewhere in range of 1 million tonnes LCE just to meet their EV sector demand. To protect their respective auto sectors, they must build refining capacity, which they are, but the bulk of the materials needed to feed said refineries will be imported.
There is 2 lithium mines operating in NA atm, one in Canada and one in the US with current combined LCE capacity of ~ 33kt, 3.3% of their 2030 needs. If lithium prices stay at their current lows, I believe said Canadian project will be in trouble, if not already. Over time, I/m hopeful we'll see a few new mining projects come online in the US and Canada, but not counting my chickens for the EU. By 2030, maybe the US can produce/mine 50% of their feedstock needs, though that's a stretch IMO, while the EU have announced a plan to be ~20% self-sufficient for feedstock and 40% battery chem capacity over the same time period, which for both countries from a feedstock perspective if all LCE units were produced from spod equates a 10.5 million tonne shortage, i.e. 1.4 million tonnes LCE.
There lies the opportunity for the major lithium producing regions such as, Oz and South America, to supply those economies for "almost" 90% of their needs for the next 4 years and 70% by 2030.
Therefore, in the grand scheme, no there is not oversupply of spod 5 to 6%, that is dependent on where you ship it.
As for PLS, 46% of P680 spod production is now heading to its 43kt POSCO/PLS JV refinery in South Korea, thus its not flooding the Chinese market. Additionally, PLS are edging towards the end of negotiating's to establish a second JV refinery, with up to 300kt of spod available to feed that facility, which if we assume that JV facility wont be in China, roughly 62% of P1000 capacity will heading elsewhere, perhaps to the US, EU, Indo, India, Mexico, Japan....
Also, PLS are diversifying their product portfolio, aiming to produce a midstream product at Pilgangoora mine site, which feedstock for that product may included the ~215kt of spod currently shipped to certain Chinese customers, for which those contracts expire later on this year and, if those contracts are not renewed, shipments to China could fall to ~15% of P1000 capacity.
I hope you get the picture, and PLS have experience enduring the down cycle, but this time, have a ship load of cash, are still profitable at current prices, thus can prepare to take full advantage of next up cycle.
Haveagoodone, SF
PLS Price at posting:
$3.91 Sentiment: Hold Disclosure: Held
(20min delay)