AUSTRALIAN HARD ROCK PRODUCERS WILL REDUCE THE PRODUCION AND PUSH THE LITHIUM PRICES UP.
I can see from IGO's quarterly report that Greenbushes JV (Albemarle-Tianqi-IGO) is now going to scale back the production for giving a lesson to its buyers (including Chinese; Korean and maybe Japanese). The JV will produce 25% in December quarter and even will lower it in the March 2024 quarter if needed.
I'm sure that GB JV is doing that to push the prices up.
If PLS joins the club and reduces production then you can see how the lithium prices are going up again.
MIN/ALB JV (Wodgina) may do the same and MIN/Ganfeng (Mt Marion) JV will probably join the party. It's highly possible that those two JV's will do the same as MIN is JV partner in both of them and CEO of MIN Chris Ellison was already complaining about the Chinese price manipulation.
ALB is also the JV partner in Greenbushes and will support Wodgina production reduction. However Wodgina's production (Producing 5.3% spod conc.) is already not much and Mt Marion JV is also production very low spod concentrate (3.7%).
I can see that those current producers will clear the way for LTR in next 6-8 months then LTR will start production mid next year. However LTR does not have much to do about sales as 90% of LTR's production is already sold to Tesla, LG and Ford. Our spod price is connected to lithium hydroxide price by a formula. Lith. hyd price is always higher than lithium carbonate.
Actually the spod sales of GB JV at the Sept. quarter are down only 9-10% but revenues of producers are down ave. 35% (GB JV and PLS). That shows that there is still demand but the lithium price collapsed.
When it comes to PLS, it;s even more interesting; PLS's production is only down 2%, sales are UP 6% but the sales price is down down 47%..!
Why is that happening?
Btw, as a note;
the GB JV's ave sale price realised for SC6 spod has been US$3,740/t FOB for Sept quarter.
PLS's 5.3% spod ave. sale price is US$2,240/t CIF China. And as you can above PLS says 5.3% spod is price equivalent of of SC6 is US$2,553/t CIF China again.
I don't know why PLS still making that BS. The only producer of SC6 is Greenbushes, and its SC6 price for the same quarter is US$3,740/t.
Why PLS and others still give very low SC6 price against the fact that it is being realised by GB at much higher price at every quarterly report, is not understandable, but it's misleading..!
THE CHINESE BUYS AND PRODUCES LITHIUM FROM LOW QUALITY AND LOW QUANTITY RESOURCES EVEN AT NO PROFIT, JUST TO PUSH THE LITHIUM PRICES DOWN.
The ave. EV sales growth will be around 40% this year I guess. That means demand for lithium should be up 40%. The demand for LCE (lithium carbonate equivalents) is up from 700kt to 980kt. That means there should be 280kt deficit to make batteries.
The Chinese already buys some part of it from overseas. I think they buy 80kt from overseas and 200kt from the sources below.
The Chinese is getting that part from these sources;
They are mining their own lepidolite resources like crazy and not even making profit,
They are also producing from their won salt lakes like crazy at very high cost again,
They buying from African resource at low grade in low quantities.
Some Chinese traders are also getting spodumene rocks from Afghanistan artisanal miners and transport them by trucks.
So the Chinese is doing everything for buying as little as possible from the overseas to soften the prices. However how long they can do this is the problem for them. Their lepidolite resources are now depleting significantly, their salt lakes our very low grade. Other African and Afghan resources are also not very meaningful to support the increasing demand.
BUT HOW LONG CAN THE CHINESE DO THAT? HOW LONG CAN THE CHINESE HOLD HIS BREATH?
NOT VERY LONG..!
Next year the EV sales growth rate will increase another 35-40%. Then the world will need 1350kt LCE.
Where will the Chinese find that 350kt LCE on top of 280kt of this year? It's not possible. There is no more sources to supply that.
50% of that LCE supply should come from Australian hard rock resources. That makes 175kt LCE.
Just to see its spod value of that; roughly 8t of 5.3% spod is needed to make 1t of LCE.
So 175kt LCE makes 1400kt spod concentrate.
1400kt 5.3% spod concentrate deficit for next year is more than what PLS and Wodgina (ALB/MIN JV) produces combined..!
The 50% of world LCE comes from Australian hard rock resources while the other 50% comes from the brine resources (mainly from SQM and ALB's Atacama projects).
The lithium supply is nearly like a monopoly atm. ALB, SQM, PLS, MIN, and Chinese Tianqi and Ganfeng. Those two Chinese lithium producers have also lost more than 70% of their stock price gains in last 2 years because of different reasons. Therefore they will get their lesson when GB JV and other hard rock miners reduce the production.
Here is what IGO said on their anns today.
The lithium market will consolidate itself first. The big players atm are trying to bite each other. Even Gina is on the stage now, and biting everyone (including us, LOL).
When everything is stabilised the main players are get the control then they will "look after" the buyers.
LTR will start the production when the dust settles. That is good for us,
LTR Price at posting:
$1.64 Sentiment: Hold Disclosure: Held
(20min delay)
