....lithium hodlers who held from the early days prior to the lithium boom, saw the boom and now sees the winter, elects to stay the course to wait for the next boom. The hesitation to take profits at the peak meant that they were not planning to sell below the peak price. And so they wait.
....while new lithium hodlers jump on board as lithium stocks fell hoping for a bottom pick.
....both not giving enough thought as to where the cycle is at. You can't have a lithium bottom before we get an auto bottom. We won't get an auto bottom until we are into the middle of the forthcoming recession.
Benchmark: Spodumene prices fall to their lowest levels since August 2021
14 September 2024
Spodumene prices fell to their lowest levels since August 2021 in early September, trailing the steep drop in prices of lithium chemicals in recent months, according to Benchmark.
Spodumene FOB Australia prices have fallen 14.4% so far this year to $818 per tonne in the assessment period ending 4 September, according to the Benchmark Lithium Price Assessment. Prices have shrunk to one eighth of the peak levels of $6,401 per tonne seen in December 2022.
The decline this year is very much driven by lithium chemical prices. Historically, spodumene prices follow the chemical price movement and there has been a continuous fall in chemical prices. Furthermore, there are significant inventories with suppliers and the spodumene producers in China continue to produce materials to maintain their market share
—Sophia Jang, analyst with Benchmark
Spodumene prices also notched a 3.3% decline in the two week assessment period ending 4 September, exacerbated by a significant drop in lepidolite prices in China in August, making the latter an increasingly more attractive feedstock than spodumene.
Spot prices for lithium carbonate and lithium hydroxide in China have declined 23.8% and 15% so far this year for the period ending 4 September, according to the Benchmark Lithium Price Assessment.
The declining prices have hurt the profitability of spodumene producers, especially for the higher cost producers, pushing them to cut production or delay project expansions.
According to Adam Megginson, senior analyst with Benchmark, producers don’t want to be the first to announce production pauses amid falling prices as it highlights that they are a higher cost producer. They also want to be ready and producing as prices climb back to be able to capture market share. As a result, some upstream players continue to produce despite prices falling below their costs.
This week Arcadium Lithium announced plans to put its Mt Cattlin mine into care and maintenance in 2025, citing the low price environment.
Prices are likely to remain bearish in the near term as besides falling lepidolite prices contributing to weaker demand for spodumene, producers are stocked with sufficient inventory, Benchmark said.
Posted on 14 September 2024 in Batteries, Market Background, Materials, Mining |
