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Pilbara Minerals sold two cargoes for a combined total of 10,000 dry metric tonnes (dmt) at an average price of $7,552 on an SC5.5, FOB Port Hedland basis, which is equivalent to $8,299 per dmt on an SC 6, CIF China basis, the company said.
Delivery is expected as of late January 2023, the company said.
This was $253 lower than the record-high bid of $7,805 per dmt at its previous auction on November 16.
At $7,505 per dry metric tonne (dmt), the bid was $300 lower than the record-high bid of $7,805 per dmt at its previous auction on November 16.
Chinese lithium prices have been on a downward trend since the beginning of December. Given that China’s electric vehicle (EV) production slowed during November, the demand for upstream lithium salts has also cooled, market participants said.
China’s subsidies for EVs will be discontinued as of the start of 2023, so EV consumption is likely to decline, especially during the first quarter of 2023, a prospect that has led lithium market participants to express concern.
Chinese authorities announced a year ago that the country’s EV subsidy policy would be discontinued at the end of 2022.
Under the existing policy for 2022, the subsidy for pure electric vehicles (PEVs) with a driving range of 300-400km is 9,100 yuan per vehicle, and the subsidy for PEVs with a driving range of 400km or more is 12,600 yuan per vehicle.
A resulting pessimistic demand outlook for lithium, especially for the first quarter of 2023, has created downward pressure for spodumene prices, market participants said
The starting price at the Pilbara Minerals auction was $7,500 on a SC 5.5, FOB Port Hedland basis, multiple sources told Fastmarkets, and it was not until the last fifteen seconds that the bid of $7,505 came in.
“It is surprising to see someone still willing to pay such a price,” a lithium trader said. “The market has a pessimistic outlook for lithium prices in the near future, and when this delivery of spodumene is finally produced into lithium salts and they enter the commercial stage, it is very likely that the lithium prices at that time will be higher than production costs based on this spodumene price.”
Fastmarkets’ weekly assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range, exw domestic China was 560,000-575,000 yuan per tonne on Thursday December 8, down by 10,000 yuan per tonne from 570,000-585,000 yuan per tonne a week earlier. And it was down by 10,000-15,000 yuan per tonne from 570,000-590,000 yuan per tonne on November 24, when the downtrend began.
Fastmarkets’ weekly assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range, exw domestic China was 560,000-575,000 yuan per tonne on Thursday December 8, down by 10,000 yuan per tonne from 570,000-585,000 yuan per tonne a week earlier, and down by 10,000-20,000 yuan per tonne from 570,000-580,000 yuan per tonne on December 1, when the downtrend began.
The top bids for spodumene SC 5.5%, FOB Port Hedland at Pilbara Minerals’ previous spodumene auctions are demonstrated in the chart below.
Fastmarkets’ fortnightly price assessment for spodumene min 6% Li2O, spot price, cif China was $8,000-8,575 per tonne on December, unchanged from two weeks earlier, but up by 231.5% from $2,400-2,600 per tonne on January 6.
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