The Second Drop in the Year! Pilbara Lithium Concentrate Auction Price Drops $300/mt!

SHANGHAI, Dec 15 (SMM) - On the afternoon of December 14, Pilbara Minerals conducted a new round of lithium concentrate auction, and the auction price of was $7,505/mt, which was $300/mt or 3.8% lower than the auction price on November 16, 2022. The cost of 1 mt of LCE was about 549,000 yuan/mt with a grade of 5.5%. After considering the logistics cycle, the products will enter the market in the first quarter of 2023. (Note: cost of 1 metric tonne of LCE: (7,505 (auction price) + 90 (freight rate)) × 6/5.5 (grade conversion) × 8 (unit consumption) × 1.13 × 6.75 (exchange rate) + 25,000 (conversion margin) = 549,000 yuan  

This auction price fell for the second time this year due to weak demand in the domestic market. The supply of lithium carbonate dropped slightly by 7% due to the seasonal production reduction of the salt lake and the impact of the environmental protection incident in Jiangxi in the first half of the year. After the peak season, the power battery market weakened. Coupled with the expectation of weak demand in the first quarter, orders of cathode material decreased significantly and the lithium salt market weakened. The cathode material plants purchased carefully and mainly digested its own inventory, hence the overall inventory declined slightly. In terms of prices, the upstream salt factories intended to raise prices, but the downstream cathode material factories were very cautious in procurement amid the decline in orders and the expected price drop of lithium salt. The traders were active in selling and the retail transactions in the market declined.

In terms of future market expectations, the upstream salt factories still intend to raise prices before the year end. However, considering factors such as the elimination of subsidies and the seasonal low in the first quarter, terminal consumption may weaken further, and the overall prices may fall slightly.

The first auction occurred on July 30, 2021 when the transaction price was $1,250/mt, SC5.5%, and the transaction volume was 10,000 mt.

The second auction occurred on September 13, 2021 when the transaction price was $2,240/mt, SC5.5%, and the transaction volume was 8,000 mt.

The third auction occurred on October 26, 2021 when the transaction price was $2,350/mt, SC5.5%, and the transaction volume was 10,000 mt.

Fourth auction: April 27, 2022, $5,650/mt, SC5.5%, 5,000 mt;

Fifth auction: On May 24, 2022, $5,955/mt, SC5.5%, 5,000 mt;

Sixth auction: On June 23, 2022, $6,350/mt, SC5.5%, 5,000 mt; Seventh auction: July 13, 2022, $6,188/mt, SC5.5%, 5,000 mt. (Dropped for the first time this year)

Eighth auction: August 2, 2022, $6,350/mt, SC5.5%, 5,000 mt.

Ninth auction: September 20, 2022, $6,988/mt, SC5.5%, 5,000 mt.

Tenth auction: October 18, 2022, $7,100/mt, SC5.5%, 5,000 mt.

Eleventh auction: October 24, 2022, $7,255/mt, SC5.5%, 5,000 mt.

Twelfth auction: November 20, 2022, $7,805/mt, SC5.5%, 5,000 mt.