I'm a bit dubious about the assertion that since a very few producers become uneconomical much below this level it is a price floor. Plenty of producers both spot and brine can produce significantly below the current spot price. Heck, look at Johnny-come-lately AGY claiming it can produce brine far below the current spot price - do we want to take that claim seriously or not?
The reality is that global production is steadily growing and AGY(/Puna) doesn't have a unique ability to produce far more cheaply than everyone else.
We saw a massive spike in Chinese prices thanks in no small part to insane Chinese government subsidies which resulted in manufacturers mass producing complete garbage EVs which literally went directly to massive car graveyards. That situation is unlikely to be repeated.
Any price floor is not determined by a few high cost producers, and they become increasingly irrelevant as supply increases from new producers with lower production costs, us being an example - rare on the ASX but globally not so much.
In reality prices could potentially go lower. Let's not forget that as recently as 2021 the lithium spot price was around 50,000CNY/tonne, less than a third of what it is now, and it spent the previous few years constantly below 100,000CNY/tonne - clearly there were producers with costs well below where we are now.
On the other hand, it's very difficult to find a price ceiling; low prices stifle new production and demand continues to increase. Even lithium prices much higher than we've seen so far don't form a barrier to new EV production or demand, so if there is a supply shortfall, prices could potentially go much higher.
In 2020, 21, and 22, prices were low mid year then around August to November began to rise, peaking around late December to March. I interpret this as demand being seasonal while supply is less so, resulting in the seasonal price cycle, and we're due for the beginning of that seasonal rally... if it does happen this year. For our sake let's hope the same happens in 2023 (a spot price rally with that timing could coincide beautifully with our permit, production and resource upgrade plus and offtake deals etc).
The reality is, so much of it is uncertain, and wishful thinking has clearly been a big problem for a lot of people here. A lot of it comes down to what happens in China, a country which on multiple layers is completely insane, and let's not kid ourselves, the west is more than insane enough too these days. With no real price floor (at least not above 100,000CNY/tonne) or ceiling (I can't really see one at all, it just comes down to what consumers are willing to pay for a car, and lithium prices need to get ridiculously high before that's an issue) it's no wonder we've seen massive lithium price fluctuations. The 'experts' put out their predictions and analyses but we all know how reliable that is. I was guilty of buying into the 'production can't keep up with demand for years' hype, but really we're seeing production coming along pretty quickly. I do expect there will be a shortfall for several years starting in the not too distant future, but we're kidding ourselves if we are sure about what will happen.
I know it's much more popular to just slide the setting all the way to bullish and put everything else on ignore, but that doesn't really serve us well, it just helps us feel better for a few minutes.
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