An auction stunned the market: $90,000 is only the starting point for the rise in lithium prices?

Recently, an auction in Australia attracted the attention of the industry.

Australian lithium miner Pilbala Mining held its first spodumene online auction on July 29th. The auction of 10,000 tons of spodumene concentrate, a total of more than 30 companies participated in the auction.

In the three-hour auction, a total of 62 auctions were held, of which 17 bidders "showed strong interest". In the end, the auction price of the spodumene concentrate was raised to US $1250 per tonne, plus freight to the domestic price of US $1315 per tonne, an all-time high.

At this auction price, the cost of lithium carbonate would be more than $97000 per tonne, far exceeding the current spot price of about $90, 000 per tonne.

The result of such an auction has once again aroused heated debate in the industry, and it seems to suggest that the price of lithium ore is expected to rise further in the future.

Citic Securities has raised its forecast for lithium prices, and it is expected that this round of lithium prices are expected to rise to 12-150000 yuan / ton. Guotai Junan directly shouted in the research report that "there is no highest, only higher", and it is expected that lithium prices in the second half of the year will exceed market expectations, raising lithium prices in the second half of the year to an all-time high of 180000 / ton.

Lithium market tends to be in short supply.

The shouts of the head brokers sound a little "crazy", but they are not groundless. Under the strong demand for electric vehicle batteries, the demand for lithium is surging.

Since January 2020, Western Australian lithium concentrate stocks have fallen from their then high, from 50,000 tons of lithium carbonate equivalent to 30,000 tons of lithium carbonate equivalent in May this year, reflecting rising market demand.

In the context of reduced inventory and tight supply and demand, more and more Australian lithium concentrate companies tend to turn to spot bidding, which means that the price of lithium concentrate will rise more sharply.

According to Bloomberg NEF, there could be a shortage in the lithium hydroxide market by 2027. Although the market is rapidly planning new capacity, it will take about five years for the new plant to come online.

Bloomberg also mentioned that by 2025, 35% of the increase in lithium hydroxide supply will come from Australia's spodumene-lithium hydroxide conversion project. These conversion projects are inherently risky, and if the project is delayed, the market shortage may be advanced to 2025.

The future increment of West Australia lithium mine is limited.

The supply of lithium concentrates in western Australia accounts for 46% of the global lithium market, and from the supply side, although the inventory of lithium mining companies here has become increasingly tight, it is difficult to increase production capacity in the short term.

In Western Australia, the largest supplier of lithium ore is Terrison's Greenbush Mine, which currently has a lithium concentrate capacity of about 1.34 million tons per year and a planned production capacity of 1.94 million tons per year. The company's lithium mines are mainly supplied to Tianqi Lithium Industry and Yabao of the United States.

Mt Marion, the second-largest lithium miner, has just released production figures: its lithium concentrate production rose 34 per cent to 484900 tonnes from July last year to June this year. 50% of the interest in the mine belongs to Ganfeng Lithium Industry, and almost all of its lithium ore has been underwritten and shipped to China by Ganfeng Lithium Industry.

Pilbara Mining, which led the high-price auction of lithium concentrate yesterday, is also a major player in the Western Australian lithium market. In the second quarter of this year, Pilbara shipped 95972 tons of spodumene concentrate, but the company predicts that shipments of spodumene concentrate may decline month-on-month in the third quarter of this year, between 77000 and 90, 000 tons. Incidentally, Ganfeng Lithium holds a 6.33% stake in Pilbara.

Overall, the major lithium miners in Western Australia have limited capacity growth in the short term. Pilbara wrote in the production report: "the global demand for lithium materials continues to strengthen." Spodumene concentrate spot market will continue to tighten. "