Corrects "$1,106/dmt fob Port Hedland" to "$1,106/dmt cif China" in 2nd paragraph
Australian lithium producer Pilbara Minerals on 14 March accepted a pre-auction offer for a lithium concentrate (spodumene) cargo ahead of a scheduled auction on its Battery Material Exchange (BMX).
The offer is for 5,000 dry metric tonne (dmt) of spodumene at $1,106/dmt cif China for 5.5pc lithium oxide product, corresponding to $1,200/dmt cif China for 6pc product. The price is 85pc lower compared with the firm's last auction price in December 2022.
A shipment of 5,000t was made available for sale to a group of registered BMX participants prior to a proposed BMX auction which was scheduled for 18 March. The shipment is contracted for the October-December 2024 quarter, which is likely to lend little support to the near-term spot market given the distant shipping date, according to market participants.
The company started using its BMX online auction system in the middle of 2021 to boost spot sales and short-term offtake to complement its formula-based contract sales, which accounted for the bulk of its high-quantity sales, especially in 2022 when lithium prices were mostly on an upward trajectory. A total of 13 auctions were conducted until December 2022 when the company suspended them.
Pilbara's forecast production for 2024 is largely allocated for the firm's offtake commitments, making regular future spot sales via the BMX unlikely during this year, the company said. It plans to continuously review a variety of sales avenues including offtake contracts, closed tenders, auctions and other commercial opportunities.
The firm has increased its supplies to Chinese lithium refineries in the past couple of months, extending offtake agreements with China's Ganfeng Lithium and Chengxin.
Pilbara owns 100pc of the Pilgangoora operation, with a consortium of global partners including China's Ganfeng Lithium, General Lithium, Yibin Tianyi, Chengxin Lithium, Yahua Lithium and South Korea's Posco. It plans to expand Pilgangoora's production capacity to 1mn t/yr by 2025 from 680,000 t/yr currently.
Argus-assessed prices for 6pc grade spodumene increased to $950-1,080/t cif China on 12 March from $900-1,050/t cif China a week earlier, in response to higher lithium salts prices and lower-than-expected feedstock supply growth. But prices have been on a downtrend over most of the past year as supply expansions outpaced demand growth. Current prices are still 83pc lower than those during the start of last year.
