The pricing of the spodumene concentrate is based on the average price of the previous month, referencing Fastmarkets’ prices and those of three other price reporting agencies (PRA), with a 5% discount on a FOB-Australia basis, IGO said, without specifying exactly what “the previous month” refers to.
Under the company’s previous pricing mechanism, spodumene concentrate from Greenbushes Operation was negotiated quarterly on an FOB-Australia basis, with the same four PRAs referenced with a 5% discount, according to a company announcement on January 31, 2023.
The company also did not state whether its spodumene concentrate pricing is linked to the spodumene prices or lithium salts prices reported by Fastmarkets and the three other PRAs under the old and new pricing mechanisms.
IGO could not be reached for comment at the time of publication.
The Greenbushes lithium mine is located in West Australia and is 51% owned by Tianqi Lithium Energy Australia (TLEA), a joint venture between China’s Tianqi Lithium and IGO Limited. The remaining 49% stake is held by Albemarle.
Fastmarkets’ assessment of spodumene min 6% Li2O, spot price, cif China was $800-900 per tonne on Friday January 26, unchanged from January 24, but down by 89.44% from $7,900-8,200 per tonne on January 5, 2023.
A more frequent negotiation will allow spodumene offtake prices to reflect the market on a timelier basis, especially amid the current volatility of spodumene prices, Fastmarkets understands.
The shift in pricing mechanism comes at a time of sustained weakness in prices of spodumene, a key feedstock in lithium chemicals production, amid softening downstream chemical prices and ample supply.
The lithium price weakness has already led to changes in spodumene pricing mechanisms within the industry.
Fastmarkets observed a new spodumene pricing formula emerging in recent months for long-term contracts, which includes changing the quotational period (QP) from backward looking (M-) to forward looking (M+).
The shift in the QP was a concession from the miners to the lithium salts producers because of falling lithium prices, market participants told Fastmarkets.
Meanwhile, IGO has revised downward its production guidance from Greenbushes for the 2024 financial year (FY24) to between 1.3 million and 1.4 million tonnes of SC6.0 spodumene from the previous guidance of 1.4 million-1.5 million tonnes.
The company also expects its spodumene sales during FY24 to be 20% lower than its production amid accumulative inventories.
The decline in spodumene prices has led to production cuts and operational reviews among several spodumene miners recently.
As a result, market participants across the lithium value chain have speculated over the price floor for spodumene. Some market participants believe spodumene prices may have already hit the bottom, while others say there could still be room for further downside.
Keep up to date with the latest lithium prices, data and forecasts on our dedicated lithium price page.
