Benchmark just held a Li webinar. Some points I took away that...

Benchmark just held a Li webinar. Some points I took away that have relevance to PLS:

Recent Li spot market decline from soft downstream demand around CNY, consistent with seasonal Q1 / CNY patterns in recent years. Other factors include: Structural destocking of raw material in China during 2022 (using available material rather than paying up as spot price soared?); Negative commentary on supposed lower EV demand in China in Q1 as some EV subsidies reduced (which was more a pull forward of demand into Q422); and more recently CATL’s move to lower battery prices for long term contracts with key customers, which was viewed by some as another sign of market weakness. (Benchmark, however, view the CATL move as more a domestic market share / industry consolidation strategy, not dissimilar to what has occurred in previous cycles).
Benchmark expect Li raw material restocking to resume before the end of this quarter.

The Spod Con price for material out of Australia remains high. This is where most of the volume is.
Conversely, “non-conventional” Spod Con (China domestic?) volumes are limited. My interpretation of this rather pointed comment is that the falling domestic Chinese “spot” price is generating a lot of more publicity than it deserves. Conversely, at the 1H result, PLS’s CEO joined the dots on their February sale of 15kt with a Chinese chemical convertor, linking it to the most recent BMX in December, implying a price over US$8k/t. Quite the gap between that sale and “spot”.
Overall, Benchmark view the current Li raw material market as still being in deficit, and this Q1 weakness typically seasonal.
To further emphasise the point above re China “spot” price, Benchmark reiterate there is not one price for Li. Recent Seaborne Asian market price/s have seen modest declines. Contract pricing dynamics are still rising vs the last six months China “spot” price (as we have happily noted in PLS’s price update in December and observed in PLS’ 1H result). Benchmark’s 12m chart showed the LiOH price is still below and chasing the “spot” price – after the recent spot price fall, they are close to kissing. But Benchmark note some producers are possibly getting premium for contract over spot (didn’t mention names but I wouldn’t be giving out prizes for guessing - refer comment above re 15k sale to converter).
Longer term, Benchmark are forecasting a small Li raw material deficit in 2023 building to a slight surplus mid-decade. After that, they see a sharply growing deficit gap that widens dramatically the longer one looks out to 2030 and beyond.