“Hi Dale, customer X here. I hear you want to do a little back...

“Hi Dale, customer X here. I hear you want to do a little back and forth over contract spod pricing. No probs, I know that you know that we are getting a higher price for our LiOH and so it’s only fair that we pay more for the spod we need to make that happen. So yep we’re happy to have a chat about increased contract prices….”

“What’s that Dale, you want to shift the offtake contract price formula to adjust the price paid to monthly adjustments and rated to the last completed BMX sale? Oh yes I do see that might be better for you (now…, but we also know that the BMX spod is not delivered upon end of auction, it’s a contract to buy the spod which is shipped about 2 or more months later so what if we agree to have changes in contract price in some fashion indexed to BMX spot prices but based on BMX price say in the previous quarter because that would better reflect what the market expects to be paying in this quarter”.

“Oh, don’t forget, if we do that we can then leave it that way for when spod price starts to come off the boil a bit … or do you want your large offtake contract volume pricing to also drop off straight away like your spot price sales when (if) spod prices start to retract a touch…”

Guys, we are seeing a “discount” in offtake contract price vs spot price due to a rapidly escalating future price situation. If we were seeing a rapidly reducing price situation I’m pretty sure that many here would be saying “why on earth would our offtake pricing mechanism be set as linked directly to the spot market price? That gives no chance to properly plan when prices are moving like now…”.

It’s a two way street at some point in time. But from Buggo’s great work over here … https://hotcopper.com.au/posts/64403816/single we can now start to even better project likely contract prices of the future from current BMX prices I think.