Australian lithium miner Core Lithium recently announced that the company has completed the first auction of spodumene ore. The auction was sold at $951/t and sold 15,000 tonnes of spodumene ore with an average grade of 1.4%. The ore is scheduled to be shipped from Darwin in the fourth quarter of 2022.
According to Core Lithium, the participants in the auction are "selected suppliers active in the lithium battery industry chain". Gareth Manderson, chief executive of Core Lithium, said the completion of the spodumene ore tender was a very good result for the company and demonstrated strong demand for lithium.
Different from lithium concentrate, spodumene raw ore refers to unprocessed lithium ore products, its lithium content is generally less than 2%, and the content of waste and impurities is relatively high.
Core Lithium is understood to be an ASX-listed lithium producer that owns the Finniss lithium project near Darwin Harbour. The average annual production capacity of spodumene concentrate in the Finniss project is about 173,000 tons, and it has become a supplier of giants such as Tesla, Yahua Group, and Ganfeng Lithium.
Because the details of the specific cargo indicators are unknown, only the main content of lithium oxide is used to calculate inversely - the cost of processing this batch of raw lithium ore into lithium carbonate is at least 400,000 yuan / ton.
It is worth mentioning that this is another Australian lithium ore producer participating in the auction and bidding after the successive auctions of lithium concentrates in the Pilbara have achieved sky-high prices.
On September 20, the Australian lithium miner Pilbara completed the ninth lithium concentrate auction, with an auction price of US$6,988/ton, a 10% increase from the previous auction (August 2). The lithium carbonate produced from this batch of lithium concentrates is expected to enter the market from January to February 2023, and the corresponding tax-included cost of lithium carbonate is about 510,000 yuan/ton.
This Core Lithium lithium ore auction, the transaction price is slightly lower than the last auction price in Pilbara. According to the laws of recent years, after the rush to install and stock up before the Spring Festival, the second quarter will usually focus on digesting inventory, and the purchasing atmosphere is slightly light. The cost price of raw ore will also become an important reference.
The lithium industry analyst of Longzhong Information said that at present, the auction price of lithium ore and the spot price of lithium salt are boosting each other, and the price is constantly breaking new highs. The mismatch between supply and demand is the fundamental reason for the price increase, and the transaction mode is also the cornerstone that affects cost changes.
According to the latest data from Shanghai Steel Federation, as of the end of September, the average spot price of battery-grade lithium carbonate reached 517,500 yuan / ton, and the highest spot price has exceeded 520,000 yuan / ton to 525,000 yuan / ton, both hitting record highs. As the rising price of lithium ore will continue to push up the price of lithium carbonate, some optimistic institutions even believe that the price of lithium carbonate may even rise to 600,000 yuan in the next six months.
Regarding the crazy rise in lithium prices, Guotai Junan Securities pointed out that with the arrival of the "Golden Nine Silver Ten" peak season for new energy vehicles, the downstream rigid demand has increased, superimposed on the upstream supply contraction, and lithium carbonate will be in short supply in the short term.
Looking forward to the market outlook, driven by rising raw material prices, combined with strong downstream demand and forgetting to stock up, the price of lithium salts will likely maintain an upward trend. However, considering the rising cost, the profits of the industrial chain have been completely transferred to upstream resources, and the integrated upstream and downstream enterprises will achieve higher profits. At this time, the value of domestic integrated enterprises with resources is prominent.
However, in the face of the long-term bullish trend of lithium prices, while some people are optimistic, some people express a cautious attitude. After all, a tree cannot rise to the sky, and there is nothing that can only rise and never fall.
From a long-term perspective, with the successive release of production capacity, $65,000 is a psychological price and a balance point for high profits. The price of lithium salt should drop significantly in the next two years, there is no shortage of lithium ore resources, and the profits are too high, and the Eight Immortals will inevitably cross the sea.
According to SMM estimates, after entering 2023, with the release of many projects such as salt lake and pyroxene, the growth rate of lithium resource supply may officially exceed the growth rate of demand in 2023, and the original demand gap caused by the mismatch between supply and demand will be made up. Superimposed the supply supplement brought by lithium battery recycling, thus ushering in the accumulation of storage for about three consecutive years. At that time, lithium prices may gradually return to rationality with the correction of supply and demand structure.