So one from Morgan Stanley and one from JP Morgan (No.1 Shareholder) too. Both Bullish On Spodumene by 2025.Lithium supply expected to increase by 2025; future uncertain for the North West Shelf
By Angelique Thakur
Lithium low prices expected to improve
JP Morgan expects demand for lithium hydroxide to soon outstrip that for lithium carbonate. This will be driven by demand for electric vehicle batteries and will also increase demand for the source mineral spodumene.
On the supply side, the current price of US$400/t for spodumene is considered unsustainably low by JP Morgan analysts. This becomes clearer when the current price is compared to the US$1,000/t levels seen in 2018.
While JP Morgan does not expect a material rebound, it does expect the price to increase to US$550/t in the longer term, noting industry experts also expect a rise between US$500-650/t.
The Australian lithium sector is still in its infancy with operations at Wodgina and Pilgangoora yet to ramp up. JP Morgan suggests costs will be defined by concentrate quality and plant recoveries.
The market, already oversupplied in 2019 with demand falling, was expected to improve in the second half of 2020, but it seems any improvement has been pushed out due to the pandemic-led disruptions.
Galaxy Resources ((GXY)) Mt Cattlin mine andPilbara Minerals ((PLS)) Pilgangoora are operating well below capacity.Mineral Resources ((MIN)) Wodgina also remains on care and maintenance and the broker notes a number of projects are at their final investment decision stage (FID).
JP Morgan expects more than 5mpta of spodumene supply by 2025
- In Summary All looks good if you can get Spodumene operate efficiently and not on Western Shelf as you are likely to go broke.
