"We have updated our lithium price outlook on a slower than anticipated price recovery due to short-term demand weakness and supply dynamics. We maintain a strong EV-led long term market outlook, with prices supported by delayed investment in new sources of lithium supply.
For FY25, we estimate SC6% prices to average US$1,200/t (previously US$1,400/t) and lithium carbonate of US$16,500/t (previously US$20,000/t). Concurrently, we have marked-to-market our June 2024 quarter SC6% price (US$1,170/t, 17% higher than expected) and A$/US$ FX rate (US$0.66/A$, 1% higher than expected).
EPS changes in this report are: FY24 unchanged; FY25 -19%; and FY26 -2%.
PLS is a large, liquid and clean exposure to global lithium fundamentals and sentiment. PLS is a low-cost producer, it operates in a tier one jurisdiction in Western Australia, and has a strong balance sheet ($1.8b net cash at 31 March 2024) which can withstand weaker lithium prices and support expansion programs.
We are confident that EV-led demand will see strong long-term lithium market fundamentals. However, weak near-term lithium market sentiment results in us retaining our Hold recommendation."
