Lithium prices have continued to stage a recovery after a rise in Chinese lithium carbonate futures was followed by escalating spodumene spot sales.
6% Li2O spodumene, the benchmark for the main product traded by WA’s hard rock lithium miners, hit 2.5-year lows of US$850/t in January leading to moves from producers to downsize supply plans.
A number of announcements have seen product pulled from the market in the months ahead.
The world’s largest lithium mine, Greenbushes, will cut FY24 output by 100,000t, while Arcadium’s (ASX:LTM) Mt Cattlin will deliver 75,000t less in 2024 and Mineral Resources (ASX:MIN) will delay the switch on of the third 250,000tpa processing train at its Wodgina mine.
There have also been reports of environmental crackdowns in China’s lepidolite mining sector, believed to set cost support for the downstream lithium chemical industry.
Fastmarkets, one of the price reporters most relied on by Western miners, says SC6 is now fetching US$975/t, up US$125/t in the past week and a bit.
It comes after nickel, the other Aussie battery metal in price strife, recorded a surprise rebound across February, almost touching US$18,000/t after sinking below US$16,000/t during the previous month.
The trigger for that run has been slowing approvals in Indonesia and stronger than expected demand from China’s stainless steel producers, which saw Macquarie analysts led by nickel vet Jim Lennon forecast a slight 40,000t surplus in 2024, compared to a debilitating 239,000t surplus projected by the International Nickel Study Group in October.
Are we back in battery metals business?
Not so fast, say Goldman Sachs commodity specialists led by Nicholas Snowden.
Persona? Non grata
The lithium game’s biggest antagonist in the minds of some investors, Goldman has regularly predicted oversupply and price slides to the dismay and bemusement of miners.
Only … it’s kind of been right.
While positivity is returning to the space, GS says it’s too early to call the end of the bear market.
Wall Street’s battery metals persona non grata says prices for cobalt, nickel and lithium carbonate still have 12%, 15% and 25% downside over the next 12 months.
It predicts lithium carbonate will slip to US$10,000/t, with nickel to tumble to US$15,000/t.
Lithium carbonate spot prices averaged US$13,200/t yesterday according to Fastmarkets.
Goldman’s still bearish stance came despite its assessment that price declines had led to ‘meaningful degree of supply rationing effects over the past quarter’, still expecting large surpluses to transpire.
While lithium carbonate production fell in China in February during the Spring Festival celebrations, Shanghai Metals Market analysts say it could rebound 38% in March and another 15% in April, expecting surpluses to persist through 2026 as global LCE production capacity lifts from 1.54Mt in 2023 to 2Mt-plus in 2024.
Ex-div BHP and Rio sink materials
Despite low steel stockpiles helping iron ore prices back above US$115/t yesterday, BHP (ASX:BHP) and Rio Tinto (ASX:RIO) pulled an otherwise solid materials sector close to breakeven after going ex-div.
BHP fell 1.11%, while Rio was down 2.44%.
The big winners came in the gold space, where prices hit new records overnight due to comments from US Fed chair Jerome Powell on potential 2024 rate cuts, as well as battery metals, with lithium miner MinRes (ASX:MIN) and rare earths play Lynas (ASX:LYC) the top performing resources large caps.
Monstars share prices today
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