CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
Shares of lithium producers and explorers slumped on Thursday after a closely watched auction by Pilbara Minerals showed a rare decline in prices of spodumene concentrate.
Pilbara Minerals (ASX:PLS) announced its average monthly auction in December achieved a price of $7,552 per dry metric tonne (5.5% spodumene concentrate on a Port Hedland FOB basis), down from $7,805 a month earlier. The price for the 10,000 tonne cargo equates to $8,299 per tonne on a 6% concentrate (CIF, China) basis with deliveries expected from late January 2023.
Pilbara Minerals, which wholly-owns the Pilgangoora mine in Western Australia, was the biggest loser, shedding 11.4% for a market capitalisation of just over A$12 billion ($8.1bn).
Mineral Resources (ASX:MIN), the most valuable lithium share in Sydney with a market worth of A$15.6 billion, gave up 4.7%, Allkem (ASX:AKE) declined just under 5% while IGO (ASX:IGO) fell 4.3%. Smaller Australian players Liontown Resources (ASX:LTR, Core Lithium (ASX:CSO) and Sayona Mining (ASX:SYA) dropped 7.9%, 9.4% and 6.3%, respectively.
The weakness spilled over to North American markets with SQM (NYSE:SQM), the world’s number two producer of the battery metal, giving up 5.1% in afternoon trade in New York, affording the Chilean giant a $24.7 billion market cap. SQM investors are still enjoying a 70% run up in the stock in 2022.
Albemarle (NYSE:ALB), the world’s top lithium miner by output with a market value of $28.2 billion, was left relatively unscathed with a 2.7% decline amid general market weakness on US markets. The biggest loser in New York was Sigma Lithium (NASDAQ:SGML) which fell 6.3%, although punters who picked up the stock at the beginning of the year can point to gains of 185% in 2022.
Benchmark Mineral Intelligence said on Wednesday Chinese lithium prices fell for the first time since May as uncertainty grows about demand in the world’s second-largest economy following the easing of covid-19 restrictions and the looming end of electric vehicle subsidies.
Lithium prices have defied predictions of a sharp pullback, however, and ex-works Chinese battery grade lithium hydroxide is still up 170% year-to-date averaging $81,000 a tonne during the first two weeks of December, according to Benchmark. Lithium carbonate prices have followed a similar trajectory, according to the London-headquartered battery supply chain and pricing specialists.
Benchmark data show spodumene prices up 257% this year averaging some $5,900 a tonne for 6% concentrate FOB Australia in November. Benchmark commented that spodumene contract pricing mechanisms tied to the lithium chemicals spot market had been successfully renegotiated, allowing for a shorter lag time for pricing movements in the chemicals market to be reflected in spodumene pricing.
