What Goldman says
“… the recent rally in lithium prices should not be interpreted as the end of the bear market, where further supply rationing is needed to reduce both the 2024E surplus and now larger surplus in 2025E,” it says.
“While lithium chemicals forward curves remain in contango, we note that lithium chemicals futures have largely been in contango for most of the price decline from early 2023, so far making them a poor predictor of spot pricing,” it says.
‘Contango’ occurs when futures contract (buy later) prices rise above spot (buy now) prices.
“Similarly, while recent lithium auctions have also brought improving near-term sector sentiment (with some market volume additions 2H weighted), we note announced cargo sales through March make up less than 1% of out CY24E global spodumene volumes and less than 0.5% of total lithium supply.”
In March, Pilbara Minerals (ASXLS) injected some sentiment into the market after accepting a pre-auction offer for 5000t of 5.5% Li2O con at US$1106/t, equivalent to US$1200/t for the benchmark 6% stuff (SC6).
That was well above SC6 spot prices of ~US$950/t. Fellow major Albemarle also sold its own spodumene via auction at a substantial premium.
I know lithium holders would want to disagree with Goldman, that's fine, as long as you know that that meant that instos won't be that enthused on lithium stocks at least for the time being, or they are probably taking a short position and hoping to prosper from it at least in the short to medium term.
LS) injected some sentiment into the market after accepting a pre-auction offer for 5000t of 5.5% Li2O con at US$1106/t, equivalent to US$1200/t for the benchmark 6% stuff (SC6).
