If you can bear putting up with me spamming the forum today I...

If you can bear putting up with me spamming the forum today I want to revisit a point I made this morning about supply and demand.
This in some ways is what I was wanting to find time to write back to @regal when he asked about what I thought was going on.

If you read the Price Paradox article from Benchmark, 2 posts above, you will see a timeline that illustrates the ore qualifying period from shipment to the processed spodumene being tested as being capable of producing battery grade lithium carbonate/hydroxide.

The fastest timeline that can be achieved is a little more than 6 months.

I think very little thought has gone into this situation and the entire lithium market has been over-simplified as a commodity resource, when in fact it is a more complex chemical industry.
It take a lot of time to match product to client.
The converter and ore body must match and both refine their flow charts to remove impurities.

This must be an on-going process as mines move through differing areas which have different levels of mica, iron etc.
I'm not the full bottle on the effect of impurities but I understand that high iron makes for a bad match for a converter that wants to produce hydroxide. Mica has been a confusing term. In reality spodumene itself is a mica family mineral. HC has concentrated on grade, but I don't know if anybody who posts on this forum really understands how the whole matrix of grade and impurities works.

What it means is that say Mining Company A wants to compete with Mining Company B - the advantage in perhaps competing on tonnage costs between the miners plays a much less significant role if there is not a very good match for the product at the converter.

That means contracting is important for both players. You can't simply say to a competitor's client converter - "We have a bit spare this month, would you like some?".
You would think that we would have heard something about this if it was going on. The truth is it is not that simple.
It has been better for a miner to wait for their clients to deal with bottlenecks than it has been to try to shop their excess, simply because the plants that took it would likely produce a worse product at much worse recovery rates.

You can see perhaps the results of rushing in slightly half-cocked at A40.
They had a tantalum operation and arrived very quickly as a producer. But what has happened since?

They may well be the first to exit the ranks of producers as well. Or get taken over.

Perhaps some very important steps were missed in making sure that the off take was working for all parties.
There is perhaps still a general lack of experience with some mining operations and new converters that can mean that some technical data like grade is actually not as relevant as other aspects of the ore.
Another example - Why are PLS shutting down now, after recently declaring "Commercial Operation"?
Why are these plants operating at such higher costs than they advertised? Why are they failing to achieve the recovery rates?

The answer is consistent high quality product is harder to achieve.
DSO was an absolute brain fart.
I called it out when I saw it but nobody believed me.

An excess of spodumene coming from Company A does not necessarily mean that it will find a quick buyer at Converter X, Y or Z.
I hope this is making sense to you. Perhaps somebody else can put in better and faster.

It is an industry of many moving parts and differing product levels - but the only one that counts for us is battery grade.

Now - to how that all works in with the state of supply and shipping.

Benchmark Intelligence also lay out the timeline for a series of converter upgrades.
One of our clients was on the list. They were down as targeting completion of their upgrade in late 2018.

The printed list must be slightly out of date, as the Yahua upgrade was not completed until July. (and - voila - there were the booked ships again)

We also know that the converter upgrade was slightly larger than shown.

What that indicates is that some of these Chinese converter upgrades have not exactly been achieved to their projected timelines.
Certainly the list is large enough to absorb current production and most were targeting H2.
Are some going to be late? Very likely, and, just as Yahua went for a bit more, some of these converters will come back even larger, more tuned to the specific product that they’re getting from WA miners, and producing a better BG product for the gigafactories.

That - in a nutshell - is where I see the sector is at.

It has been misrepresented as Iron Ore 2.0 - when the real situation is vastly more complex.
Miners and Converters are in a lock-step dance.

It is difficult to bring on new battery grade supply.
Grade is not enough. Experience and refining and tuning the concentrators and converters to each other

in harmony is the only way to produce good cathode. This takes time and the market is impatient and sees every little interruption as DoomsDay.

imo - Benchmark’s analysis is the one to be paying attention to at the moment

and I don’t think enough people are realising or bothering to try to understand the reason for the disconnect between published spot pricing and the reality of dealing with converters that need product and need to have locked in suppliers and established relationships to produce battery grade.

As always. DYOR.