Lithium, crucial for the energy shift and EV market, is key in supply and demand. Although the domestic price of lithium carbonate has shown temporary signs of stabilization in recent days, the outlook for lithium ore is still bleak.
The current domestic inventory of lithium ore remains high, which exerts additional downward pressure on prices. Despite buyers' willingness to enter the market, their expectations of further declines in lithium prices have led to them offering highly competitive low bids. Lithium ore sellers, pressured by fierce bargaining, prefer to wait for market conditions to improve.
Traders cut back on importing African lithium ore as mine owners rejected low prices. With a 2-3 month shipping time to China and transit risks, interest in year-end imports has waned.
Australian mines have adjusted strategies due to low lithium ore prices nearing some mines' cost lines. Australian mining company Core Lithium has initiated a strategic review in response to the significant downturn in lithium market conditions. The recent price decline has prompted it to explore various cost-cutting and productivity-enhancing measures. These include potentially curtailing operations temporarily, seeking commercial solutions, and trimming exploration and other discretionary spending. The strategic review will focus on maintaining business value as well as future options. In line with this objective and the need to reduce expenses, Core Lithium has halted early works at the BP33 site near Darwin.
SMM believes that the production of lithium mines in Australia will remain stable overall in the short term as production cutbacks would hurt cash flows and potentially risk share prices. Since holding onto cargoes would incur warehousing costs, mines are still willing to sell. SMM survey shows that prices of Australian spodumene (SC6) shipped in December are already close to $1,000/mt. The ongoing price downturn is set to persist.
