Lithium Carbonate Smelters Eyeing Q4 Australian Spodumene Pricing, Which Plays A Crucial Role In Affecting Smelters’ Marginal Costs

After a brief rally, lithium carbonate prices have fallen back again, leaving market players more concerned than ever about the future price trend of the key material used in EV battery. Market attention has now shifted onto upstream raw material pricing in the last quarter of this year. As Australia is the top source of China’s spodumene imports, quarterly spodumene pricing of Australian mines is the most crucial factor for affecting the marginal costs of lithium carbonate production. While market opinions are divided over Q4 pricing, it seems that an overall pullback in lithium ore prices has become inevitable.

Talks over Q4 Australian spodumene pricing are still under way. There are rumours that an Australian mine has switched to M+1 scheme with Chinese lithium carbonate smelters under which spodumene prices are pegged to next-month lithium carbonate prices. However, SMM learned that this scheme is still under discussion. Notably, leading mines are still not making compromises and stick to Q-1 model under which spodumene prices are based on previous-quarter lithium carbonate prices.

Spodumene import prices from countries other than Australia are likely to fall at a faster pace in the future. It has been confirmed that one mine in Brazil has agreed to price its spodumene prices using SMM battery-grade lithium carbonate as a benchmark +discount, and this price has exceeded $2,000/mt.

In September, China's import volume of spodumene concentrate skyrocketed to 490,000 mt, up 119% MoM and 105% YoY. Australia accounted for about 80% (399,118 mt), up 131% MoM, mainly due to large shipments to Sichuan ports (177,633 mt). Imports from Africa, including Nigeria and Zimbabwe, also significantly increased. Market news suggests huge lithium ore imports from Zimbabwe by year-end, potentially reaching 10,000 mt LCE in a given month, pending verification.

Due to pessimism for this year's lithium prices, buyers still find it difficult to accept even when 6% spodumene concentrate is priced at $2,000 /mt, which leaves lithium carbonate production costs at around 160,000 yuan/mt. After a drop in SMM battery-grade lithium carbonate price in October 24th, it's likely that back-and-forth negotiations over ore price will intensify, and the marginal cost of lithium salt may fluctuate. SMM will keep tracking Q4 spodumene prices.