SMM6, 18 June:, Pilbara Minerals issued an announcement on June 17, updating and releasing the production and marketing data of its mine Pilgangoora. The main points of this arrangement are as follows:

The main results are as follows: 1) the production optimization of Pilgangoora mine has been carried out all the time. The output of spodumene concentrate in May was 22375 dry tons, and the capacity utilization rate of the first stage reached 85%.

2) the sales of spodumene concentrate in the second quarter of, Pilbara Minerals are limited due to the slow delay of conversion and production progress of Chinese smelting enterprises.

3) with regard to the phenomenon mentioned in point 2, Pilbara Minerals provides supply to other customers in addition to lithium mines for customers who have signed long-term agreements.

4) for the short term June and July, the company expects lithium concentrate production to decline slightly by (moderate). Production is estimated at 20, 000 to 24, 000 dry tons in June, and an expected two-week shutdown is planned in late July, using this time to correct RCR defects, improve factory work and de-inventory.

5) the price of spodumene concentrate in China has continued to decline recently, and the current price range is 600-640USD / dmt, CFR (6%).

Through the announcement of Pilbara Minerals, one leaf knows autumn, we can see two points to discuss and think about.

1. Spodumene concentrate trading has entered the buyer's market-the production capacity release of Chinese lithium salt smelters has been slower than expected, and the lithium ore surplus is significant. This also demonstrates our previous view, as can be seen from a detailed analysis that "[SMM analysis] the price of spodumene concentrate fell by 15 per cent in March 2019 and the smelting conversion was not as expected". For this lithium mining enterprises (such as Pilbara Minerals), the measures taken are divided into two aspects: the sales level, because the long contract customers can not pick up the goods according to the plan, out of helplessness will increase spot transactions, choose other agents for their sales; production level, reduce production in order to avoid excessive inventory accumulation.

two。 The trading mode of spodumene concentrate is divided-whether spot trading will become a trend phenomenon. We have previously mentioned that the oversupply of spodumene concentrate has led to a shift in the spodumene procurement pricing model from annual frequency pricing to semi-annual and quarterly pricing, including new models such as formula pricing (linked to lithium salt prices).

According to Pilbara Minerals's move to start selecting other agents to sell its products, as the supply of spodumene and suppliers grow, in addition to the previous pricing model changes, the trading model is also likely to change. In other words, the market for spodumene concentrate has changed from "one-on-one / more long association contracts" to "spot trading with a hundred flowers in full bloom".

Of course, this is a change of thought from the perspective of the buyer's market. However, for the lithium miners, who have always been relatively strong, whether there will be a request to sign a "must-pay contract (take or pay offtake)" with the smelting enterprises, in order to reverse the passive situation that "the long-term association customers are unable to buy goods as planned". We still have reservations about this.

In short, either way, the trading pattern and pattern of spodumene concentrate has changed. The change of the new energy industry coincides with the painful period, when the mountains and rivers recover, is it not the day of the willows and flowers?

SMM Cobalt Lithium Research team

Hu Yan 021 51666809

Hong Lu 021 51666814

Ning Ziwei 021 51666780

Qin Jingjing 021 51666828