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Pilbara Minerals' second spodumene auction concludes at sharply higher price than first

Highlights

Closing price of $2,240/dmt 'a really crazy high one': bidder

Limited supply, high demand drives prices up

Pilbara Minerals concluded Sept. 14 its second spodumene concentrate auction at a price of $2,240/dmt on an FOB Port Hedland basis, up 79% on $1,250/dmt at the end of its first tender July 29, with market sources saying the high value was largely driven by extremely tight supply conditions and bullish downstream demand from the electric vehicles sector.

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The price was for a spot cargo of 8,000 mt spodumene concentrate with 5.5% lithium oxide and an expected loading date in November, and is equivalent to $2,420/dmt for 6% lithium oxide. The freight rate was set at $80/dmt to mainland China.

"We started [bidding] at slightly over $1,100/dmt and we were expecting the price to hit a maximum of $2,000/mt. This [closing price] is a really crazy high one," a China-based bidder said.

A range of bids were also heard submitted at $1,160-$1,750/dmt.

Given the positive response to the digital auction via Pilbara's own Battery Material Exchange (BMX), the company is expecting to channel more concentrate sales through the platform including materials from the Ngungaju processing plant whose operations were set to recommence in December 2021.

The 8,000 mt of spodumene was roughly equivalent to Yuan 161,000/mt of battery-grade cost of production, including Yuan 20,000/mt of processing and refining fees.

"If we buy at this price, there will be no profit margins left for us," a Chinese refiner said.

Spodumene is largely traded in term contracts and little material is channeled into the spot market.

S&P Global Platts assessed battery-grade lithium carbonate at Yuan 160,000/mt and battery-grade lithium hydroxide at Yuan 150,000/mt Sept. 14, with both assessments on a delivered, duty-paid China basis.

According to China Association of Automobile Manufacturers (CAAM), sales of NEV for January to August stood at 17.99 million, up 194% year on year.

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