Australian spodumene hits record high on strong downstream lithium prices

Spodumene concentrate prices have surged to a record high on an FOB Australia basis Oct. 29 due to rising lithium carbonate and hydroxide prices over the past month.

S&P Global Platts assessed the weekly 6% lithium oxide (SC6) spodumene concentrate price at $2,564/mt on an FOB Australia basis, up $120/mt from the previous record of $2,444/mt on Sept. 14. Platts has been assessing the price since January 2019.

Pilbara Minerals concluded its third auction for a 10,000-mt spodumene concentrate with 5.5% lithium oxide, February 2022 loading, at a price of $2,350/dmt on an FOB Port Hedland basis on Oct. 26. This was equivalent to $2,563.64/dmt for 6% lithium oxide.

After Pilbara Minerals' second spodumene 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. Spodumene price plateaued as market sources were more cautious.

Although tradable levels were consistently indicated at $2,444/mt, little trades were heard concluded in the spot market in October. Downstream lithium refiners procured only out of need-to basis to avoid hefty premiums as well as tight margins.

However, as lithium chemicals prices continued to soar, market sources expressed more acceptance despite the continued spodumene price hike.

"$2,350/mt (5.5% lithium oxide basis) fits my expectation, I think it's acceptable and tradable. There's still some margin," said a China-based lithium refiner.

Market participants indicated that a processing margin of Yuan 20,000-30,000/mt were still available for converting spodumene into lithium carbonate in the current spot market.

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.

Platts assessed battery grade lithium carbonate at Yuan 201,000/mt and battery-grade lithium hydroxide at Yuan 196,000/mt Oct. 29, on a delivered, duty-paid China basis. Both prices were at a record high since Platts first assessed them on Sept. 7, 2018.

Lithium carbonate price has surged Yuan 16,000/mt since Oct. 1 while hydroxide price increased Yuan 26,000/mt.

Spodumene contract with Chinese lithium converters were heard negotiated at $1,500-$1,800/mt for the fourth quarter, double than the average price of $500-$800/mt in the third quarter.

Due to the price volatility in the market, sources also said that attitude towards fixed market pricing has shifted.

"For lithium salt prices, many are pushing for the current spot value to be based on price reporting agency's prices as the basis for fomula," said a large Chinese lithium converter.