...SC6 at US$1400/t may never be re-visited again!
...Because global economy will soften and get into recession ahead, and lithium supply will continue unabated.
...now lithium hodlers say 'the cure for lower prices is lower prices'. Except that current price isn't low enough in the context of when we see demand destruction (for autos) coming into play ahead.
Pilbara Minerals (ASXLS) says spodumene prices need to top US$1400/t for the lithium market to be sustainable in the long-term as it curtailed production by placing one of its two processing plants at the Pilgangoora lithium mine in WA on care and maintenance.
PLS also paused spending on a mid-stream demonstration plant part-funded by the Australian government, sending shares of its technology partner Calix (ASX:CXL) spiralling.
The move to shut the Ngungaju plant, acquired in its takeover of collapsed neighbour Altura Mining, will curb 100,000t of spodumene concentrate production this year, taking more material out of an oversupplied market.
“Spodumene pricing is approximately US$750/t, well that’s approximately half the consensus long term price of US$1400 per dry metric tonne,” PLS MD Dale Henderson said on a call with analysts, investors and media.
“We’re expecting price movement upwards over time because this is simply unsustainable.”
But he said it was “no surprise” to see prices plumbing in the deeps after the massive run up in prices that brought new sources of supply online.
“What we’re witnessing is a rebalance following the very strong pricing period that occurred in 2021 and 2022, there is just more to go in our view in this rebalance and ultimately price appreciation, which could happen very rapidly as we’ve seen historically,” Henderson said.
He remains bullish on the EV market, the main source of lithium demand, saying high penetration markets China and Norway are a “window to the future”.
PLS produced 220,100t of average 5.3% Li2O concentrate in the September quarter at an average realised price of US$682/t, down 19% on the June quarter, with revenue falling 31% from $305m to $210m.
Unit operating costs on a CIF basis fell 1% from US$483/t to US$480/t, with cash in the bank down 17% from $1.6bn to $1.4bn.
With the closure of the Ngungaju plant the P1000 project has been moderated to P850, all through the main Pilgan plant at the Pilgangoora project near Pilgangoora.
Guidance for FY25 has dropped from 800-840,000t at FOB unit costs of $650-700/dmt to 700-740,000t at $620-640/t, with capex shaved from $615-685m to $565-610m.
LS) says spodumene prices need to top US$1400/t for the lithium market to be sustainable in the long-term as it curtailed production by placing one of its two processing plants at the Pilgangoora lithium mine in WA on care and maintenance.
