What we learned at the Lithium Supply and Battery Raw Materials conference 2024

Price and supply were the major topics of conversation for market participants across the value chain attending Fastmarkets’ flagship Lithium Supply and Battery Raw Materials conference in Las Vegas on June 24-27

Among the more than 1,100 attendees gathered, a number of topics dominated conversation.

Bearish sentiment prevails in spot lithium market

Ongoing sluggish demand and oversupply in the lithium market has led to bearish sentiment toward the near-term outlook among delegates at the conference.

“Chile’s lithium carbonate and Australia’s spodumene are still being shipped to China in large volumes, and new lithium projects are coming online. We are having a big oversupply issue,” a trader said.

“I believe there’s still downside room for lithium prices,” the trader added.

Multiple delegates at the conference told Fastmarkets that they didn’t see any support for demand to pick up in the near term.

Some other delegates expected some restocking in the third quarter, or before China’s National Day holiday (October 1-7), which could result in a rebound in lithium prices.

“Even if there’s rebound due to restocking demand, it will be short-lived, as in general the demand is still weak,” a Chinese lithium producer source said.

Rising African spodumene supply adds pressure to lithium market

Africa will become more and more important in terms of lithium supply, further adding pressure to an oversupply market, Fastmarkets learned at the conference.

Some major Chinese lithium producers have established vertically integrated lithium mine projects in Zimbabwe, including Huayou Cobalt, Chengxin Lithium and Yahua Lithium, as well as Sinomine. Some sources expect more supply to be released from these projects later this year.

In recent months, Fastmarkets heard that direct shipping ores of spodumene had already been shipped to China in large volumes from Africa.

“With the rising lithium hard rock supply from Africa, Australian spodumene will be under greater downward pressure amid existing oversupply and weak demand,” a trader said.

“We have already been sourcing spodumene from Africa from this year, as the prices are more competitive than Australian spodumene,” a second Chinese lithium producer source said.

Major producers say auctions add price transparency, efficiency

Top executives from Albemarle Corporation and Pilbara Minerals believe recent auctions of spodumene and lithium products are adding pricing transparency and trading efficiencies into the market.

“The end goal is to really create greater visibility and transparency around all forms of pricing at all different product levels within the supply chain, and to do so in a way that you can trust,” Eric Norris, president of energy storage at Albemarle, said during the Leaders’ Keynote Debate on June 25. “I’m not saying the data that’s out there today is untrustworthy, I’m just saying it’s thin. The amount of information that goes into that doesn’t come robustly from the marketplace.”

Scrutiny of reported prices from price reporting agencies (PRAs) has grown in recent years while the global lithium market has experienced shifts in market size, structure and pricing mechanisms.

Fastmarkets harnesses a variety of data when assessing its lithium and spodumene price assessments, ensuring transparency into the “tradeable level” in the open and competitive spot market.

The US-based spodumene and lithium producer’s strategy for most of its business will remain focused on long-term contracts, according to Norris.

But the hope is that the auctions will help minimize price distortion by providing a satisfying reference point for both buyers and sellers, he said.

The auctions “potentially allow the industry to contemplate hedging to mitigate some of the pricing risks as well,” he added.

Dale Henderson, chief executive officer of Australian spodumene producer Pilbara, believes the auctions are enabling better trading efficiency, with more market maturity still to come.

“What we need to move to is more efficient trading methods, as seen in other markets,” he said.

“The auctions that have been occurring over the last couple of years – in particular this last year – are enabling that better efficiency, but ultimately there is much more to go for the industry.”

Henderson outlined three key steps for the market’s evolution:

  • Unifying product specifications and trading terms,
  • Supporting sufficient volumes from both buyers and sellers,
  • And coming together as an industry at a common marketplace.

Auctions are not uncommon in other commodity markets and can provide transparency to market prices, when full transparency regarding details and terms is provided.

These auctions, when normalized where appropriate, can be used by Fastmarkets in the price discovery process for lithium and spodumene.

Fastmarkets’ latest weekly price assessment for lithium carbonate 99.5% Li2CO3 min, battery grade, spot price ddp US and Canada was steady at $13.80-15.00 per kg on July 3. The corresponding assessment for lithium hydroxide monohydrate LiOH.H2O, 56.5% LiOH min, battery grade, spot price ddp US and Canada was also unchanged, at $13.50-14.50 per kg on the same day.

Pricing mechanisms remain focal point for market

With auctions becoming more commonplace, and new sources of supply coming into the market, attention on pricing mechanisms continues to grow.

The lithium market has seen a number of fundamental changes in this regard, shifting from a system of largely fixed-price long-term contracts to the adoption of PRA-published price assessments forming the basis of contracts.

Other shifts have also taken place, including the move toward forward-facing quotation periods in contracts.

Participants across the value chain noted that there was still room for further development in pricing mechanisms in the lithium market. However, one key trend that is rapidly emerging is the use of payables in spodumene pricing.

This is where, particularly in longer-term contracts, the value of spodumene is derived from a percentage of the price of lithium carbonate or hydroxide, depending on the contract.

This ensures greater connection between the two products, since spodumene is used as a feedstock in the production of lithium hydroxide and carbonate.

“This is exactly what we’ve been waiting to see in lithium,” one financial market participant told Fastmarkets. “It’s a sign of a market maturing.”

The reason for this shift, beyond the increased pricing relationship, is that it also enables more effective hedging across the lithium value chain, with participants able to utilize mechanisms such as the Chicago Mercantile Exchange’s cash settled futures contracts for hydroxide and carbonate.

Battery recyclers adapt to survive

After a challenging 12 months, battery recycling market participants arrived in Las Vegas less bullish than last year, with the focus being on survival in the current market environment.

Financial issues have delayed progress of some major Western entrants into the sector, while weaker battery metal prices and stronger black mass payables amid stiff competition in Asia have hampered conversion margins for black mass consumers.

One way to maximize value from recycling is selling streams of copper at high prices to offset low lithium and cobalt prices, Ryan Melsert, CEO of American Battery Technology Company (ABTC), said.

Recycling companies must “stay close” to customers such as OEMs and iron out technological issues to thrive, according to Tim Johnston, co-founder of Li-Cycle and partner at Blue Horizon Advisors.

Meanwhile, a conference delegate speaking on the sidelines was more philosophical about the need for partnerships at this time: “At winter, a lone wolf dies, but the pack survives.”

Cobalt finds support with lithium attendees from need to recycle

Cobalt found some favor at the conference from a recycling standpoint, with delegates viewing nickel-manganese-cobalt (NMC) batteries as a “ready-made” product for reuse after recycling while noting hurdles to overcome for lithium-iron-phosphate (LFP) batteries.

“For LFP, there is little appetite for recycling the iron phosphate  it’s basically waste  but NMC output can go straight back into new batteries and other sectors also,” Austin Devaney, senior commercial advisor for Piedmont Lithium, said.

Presenters also felt that the current low-price environment for many critical metals is having an impact on new operations that are trying to enter supply chains.

“At current lithium prices, new lithium projects do not make sense and prices are concerning at these levels; many in the West will operate at a loss” Norris said.

Cobalt standard-grade metal prices are at 8-year lows currently, due to a persistent oversupply that is overhanging the market. Battery-grade lithium hydroxide prices on a CIF China, Japan and South Korea (CJK) basis are at their lowest level since April 2021.

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