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Pilbara Minerals' first spodumene platform auction concludes at $1,250/dmt FOB Port Hedland

Highlights

First transparent tender seen in the lithium market

Limited supply, high demand drive up prices

Singapore — Australian miner Pilbara Minerals concluded its inaugural spodumene concentrate auction held via its Battery Material Exchange (BMX) on July 29, the company said in a media statement on July 30.

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The spot cargo of 10,000 mt spoduemene concentrate with 5.5% lithium oxide, with expected loading in mid-to-late August, was concluded at a price of $1,250/dmt on an FOB Port Hedland basis following a three-hour auction window with 17 bidders participating, the company said. Pilbara Minerals added that a total of 62 online bids were received, ranging from $700/dmt to $1,250/dmt.

The winning bid of $1,250/mt FOB Port Hedland was viewed as equivalent to $1,315/mt CIF China for 5.5% lithium oxide content, taking into account current handysize vessel freight rates.

The digital auction platform was launched earlier in 2021 as an alternative avenue for sales growth. Being the first of its kind in a traditionally opaque market, the tender was widely followed given its indication of current spot market prices.

"The opening price was set at $700/mt FOB Australia and we were expecting the price to hit a maximum of $1,000/mt. This closing bid blew our mind, we really did not expect it to hit such a high price," a China-based bidder said.

In comparison, a similar tender for 15,000 mt of spodumene with 6% lithium oxide was concluded in the week-ended July 23 at around $1,000/mt on a CIF China basis for late third quarter shipment.

"It's still more than what I expected but it's not a big surprise considering last week's tender. It's probably a reflection of the market, especially considering price expectations for the second half of 2021, when prices are likely to continue increasing," a China-based producer said.

With the vast majority of spodumene concentrate sold into term contracts as opposed to spot cargoes, market sources said that the strong buying interest for the spot tender were signs of limited supply, with Chinese lithium carbonate production expected to ramp up in August.

"Spot materials are extremely scarce. There are no stocks anywhere and downstream users are also starting to outbid for materials," a China-based dealer said.

The release of the Pilbara Minerals tender result was also attributed by market sources as the key factor behind a spike in the lithium carbonate October futures prices on the Wuxi Stainless Steel Exchange, which reached Yuan128,000/mt in the afternoon on July 30, compared with its closing price of Yuan125,000/mt on July 29.