ASX Today, page-42437

I have not kept up with all of today's posts and perhaps some of this has been remarked upon before by @anatol , but I will still post my preprepared opinions.

I have been spending time reviewing some of the published data regarding the surplus production of LCE in 2024 that was stated at the Fastmarkets conference recently to be 180,000 tonnes LCE... see (Here) FYI to get back to language most of us understand easily, 1 tonne LCE is equivalent to 6.74 tonnes SC6.

I also looked further into the Greenbushes output that was referred to in @anatol 's other recent posts. So in terms of volumes for the June quarter, the following slide from the Last IGO quarterly...note the differences in both spodumene production quarter on quarter, but more importantly the spodumene sales in kt that demonstrate the massive flood of product onto the market.

Here


This increase from 280kt to 332kt is described as a return to "normal" production levels and the growth in sales of a further 200kt of spodumene is attributable to a drawdown of inventories at Greenbushes mine.

This literally massive increase in sales came at a time when prices had been rising after a period of weakness as China had celebrated their New Year holiday... One can well ask why would the world's largest producing mine rapidly draw down inventory and thus limit price upside? A believer in the theory of Chinese manipulation would explain it by the fact that Tianqi is the effective controller of the mine through its 51% interest in the TLEA joint venture with IGO which in turn owns 51% of Greenbushes with Albemarle owning the remaining 49%. Imo all participants in GB would have welcomed the extra cashflow due to all their financial circumstances. Tianqi is currently forecast to have incurred an approximately USD700m loss in the half year to June 2024. That, together with IGO's and Albemarle's debt commitments meant little pushback against a proposition from Tianqi to effectively flood the market during a time of recovery imo.

Just to put this data into perspective, an increase in actual SC6 production of 50,000 tonnes per quarter at GB is the equivalent of an annual 200kt = 200/6.74 = 29,673tonnes of LCE annually. Add to that the drawdown of inventory from GB stockpile of 200kt means a total on an annualised basis of around 60,000 of LCE out of the Fastmarkets forecast surplus for 2024 of 180,000 tonnes LCE. It defies logic for GB to have been directed by its owners to do this, but in a sense we know that GB will contribute around 30,000 tonnes LCE less than its last quarter production going forward due to it no longer having that large inventory.

Again, if one thought that the big deliveries in June quarter will not be repeated, then arguably on an annualised basis, the absence of that extra supply in each and every quarter going forward (if converted to an annualised reduction in supply) means around 120,000 tonnes pa LCE is removed from future supply. Of course it's not as simple as that, but what I am trying to demonstrate here is that recent past supply is distorted and seemingly adding to the case for the Chinese conspiracy to manage prices to their advantage in battery cell and EV production metrics.

Regards

DF