Greenbushes has among if not the lowest cost of lithium production for any method by any producer. They are staying in business whatever happens. They are however interested in maximising profits which may occur by getting lithium back to a minor deficit situation, rather than just by punching out more product.
For example, which makes more money for a major like Greenbushes?
400t/qtr at US$1,200/t or
350t/qtr at US$1,800/t?
The first brings in $480m/qtr. The second brings in $630m/qtr. A supplier who is materially significant to the supply chain like PLS or Greenbushes, may find it in their best interests to reduce production to get rid of any surplus supply and also get back to the prices that apply when there is a shortage. Greenbushes removing perhaps 200kt of SC6 supply would make a difference to the supply/demand balance. It is likely to assist prices to increase.
Major's like Greenbushes/Pilbara decreasing supply is not that there is over supply and they can't sell their product. They are making good dollars on all that they sell, they just aren't making as much money as they would like. They are not currently receiving higher prices that they have observed the market was prepared to pay. Their best option to maximise profits for shareholders may not be maximising the volume sold but continuing to sell lots of product but just slightly less than the market wants. Opec through the Saudi's could supply all the oil needs of the world and probably at prices well under US$30/t but they have found it more profitable not to produce at the maximum possible.
Major's reducing production simply confirms there may be a way of making more money with less work and others like Core would benefit.
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