Pilbara Minerals' third spodumene auction concludes at $2,350/dmt FOB Port Hedland

Pilbara Minerals concluded its third spodumene concentrate auction held via its Battery Material Exchange, or BMX, on Oct. 26, the company said in a statement.

The spot cargo of 10,000 mt spodumene concentrate with 5.5% lithium oxide, deferred loading date in February 2022, was concluded at a price of $2,350/dmt on an FOB Port Hedland basis, equivalent to $2,563.64/dmt for 6% lithium oxide. The freight rate was set at $60/dmt to Mainland China.

A total of 25 bids were placed on the electronic platform during the 45-minute auction.

"The opening bid was $1,000/dmt and the price rose slowly at the start. In the last 30 seconds, bids jumped from $1,800/dmt to $2,200/dmt, and in the last few seconds it concluded at $2,350/dmt," an international-bidder said.

After the second auction concluded at $2,240/dmt, $990/dmt or 79.2% higher than the closing price of the first tender at $1,250/dmt FOB Port Hedland on July 29, market participants were expecting the third auction to land somewhere between $2,600-$3,000/dmt.

"$2,350/dmt is more reasonable. I feel that lithium converters can still accept this price now," said a domestic lithium converter.

The 10,000 mt of spodumene was roughly equivalent to Yuan 171,553/mt of battery-grade lithium carbonate cost of production, including Yuan 20,000/mt of processing and refining fees.

S&P Global Platts assessed battery-grade lithium carbonate at Yuan 200,000/mt spot market, and battery-grade lithium hydroxide at Yuan 190,000/mt on Oct. 26, both on a delivered, duty-paid China basis.

Risk associated with the delayed loading and shipment deterred some sources from participating in the auction this time.

"It's not to say the market is getting weak, people are just being more cautious. They don't want to take the risk," an international trader said.

With February 2022 loading, coupled with one to two months of processing and refining, the material will only be available for use tentatively in May, market sources said.

Furthermore, many unexpected circumstances within domestic China such as power rationing, winter power restrictions and fluctuating coal prices had contributed to a lower buying interest.

"It's risky to buy and carry goods at this point in time," said a domestic consumer.

Many sources are still expecting high spodumene prices to keep lithium chemical prices buoyant into the fourth quarter.