Deleted

[Dave Evans]

Deleted

 

[Frank]

Lithium price routed on supply surge​

The price of lithium was decimated in 2023, but predictions for next year are far from rosy. Lithium demand from electric vehicles is still growing rapidly, but the supply response has overwhelmed the market.

Global lithium supply, meanwhile, will jump by 40% in 2024, UBS said earlier this month, to more than 1.4 million tons of lithium carbonate equivalent.

Output in top producers Australia and Latin America will rise 22% and 29% respectively, while that in Africa is expected to double, driven by projects in Zimbabwe, the bank said.

Chinese production will also jump 40% in the next two years, said UBS, driven by a major CATL project in southern Jiangxi province.

The investment bank expects Chinese lithium carbonate prices could fall by more than 30% next year, dipping as low as 80,000 yuan ($14,800) per tonne in 2024, averaging at around 100,000 yuan, equivalent to production costs in Jiangxi, China’s biggest producing region of the chemical.

Lithium assets still in high demand​

In October, Albemarle Corp. walked away from its $4.2 billion takeover of Liontown Resources Ltd., after Australia’s richest woman built up a blocking minority and effectively scuppered one of the largest battery-metals deals to date.

Eager to add new supply, Albemarle had pursued its Perth-based target for months, eying its Kathleen Valley project — one of Australia’s most promising deposits. Liontown agreed to the US company’s “best and final” offer of A$3 a share in September — a near 100% premium to the price before Albemarle’s takeover interest was made public in March.

Albemarle had to contend with the arrival of combative mining tycoon Gina Rinehart, as her Hancock Prospecting steadily built up a 19.9% stake in Liontown. Last week, she became the single largest investor, with enough clout to potentially block a shareholder vote on the deal.

In December, SQM teamed up with Hancock Prospecting to make a sweetened A$1.7 billion ($1.14 billion) bid for Australian lithium developer Azure Minerals, the three parties said on Tuesday.

The deal would give the world’s no.2 lithium producer SQM a foothold in Australia with a stake in Azure’s Andover project and a partnership with Hancock, which has rail infrastructure and local experience in developing mines.

Chile, Mexico take control of lithium​

This week Chile’s President Gabriel Boric hailed the formation of a new government-controlled lithium partnership that fuses assets of state-run Codelco with private miner SQM, as the leftist leader advances his push for greater public control over the battery metal.

SQM said it would partner with copper giant Codelco for the future development and production of the metal in the Atacama salt flat, in a tie-up set to kick off in 2025 and run through 2060.

www.mining.com

Jiangxi expands lithium base in quality push for industrial ecosystem ​

East China’s Jiangxi province is actively leveraging its advantages in upstream lithium resources to expand downstream sectors such as battery and electric-vehicle manufacturing, with a view to becoming a leading industrial cluster.

The province has already formed three major lithium battery industrial bases in Yichun, Xinyu, and Ganzhou, and various clusters for lithium-battery manufacturing in cities such as Nanchang, Shangrao, Pingxiang and Fuzhou.

Last year, the total value of Jiangxi’s lithium battery and new energy industry reached 406.51 billion yuan, a 120.3% year-on-year (y-o-y) growth, according to the provincial government.

The province has developed a complete industrial chain covering mining and production of major battery materials, lithium batteries, new energy vehicles (NEV) and power storage facilities, said Jiang Mingcheng, deputy head of the Industry and Information Technology Department of Jiangxi Province.

Yichun, a city in the northwest of Jiangxi with abundant lithium resources, is optimising its business environment to attract top-tier lithium battery companies.

In September, Yichun launched a plan to promote the development of the new-energy sector with an emphasis on the lithium-battery industry, aiming to advance the industry chain toward high-end, intelligent, green and integrated development.

The city hoped its lithium battery and new-energy industry would achieve a revenue of 250 billion yuan by 2026.

To realise the vision, the local government said in the action plan that it will intensify lithium-rich mica mineral resource extraction, develop technologies for extracting lithium from salt lakes and lithium spodumene mineral, and enhance its industrial ecosystem.

Further efforts will also be made to promote the progress of major projects from battery giants like Contemporary Amperex Technology Co Ltd (CATL) and Gotion High-tech, to further expand the production capacity of lithium carbonate, battery materials and batteries.

CATL’s first project in Yichun, the Yichun Times Battery Factory phase one, garnered a total investment of 13.5 billion yuan with a planned annual production capacity of 50 gigawatt-hours for lithium-ion batteries and energy-storage batteries.

The project’s first battery-cell factory has been put into operation.

Besides supporting leading battery makers to set up branches in Yichun, the local government said the city will also promote the establishment of research and development institutions by leading enterprises like CATL, as well as green development of lithium resources, recycling of used lithium batteries, and lithium slag utilisation.

Last year, Yichun produced over 140,000 tonnes of lithium carbonate, accounting for about one-third of the country’s total.

In just three years, revenues from the lithium battery and new-energy industry in Yichun grew five-fold, from less than 20 billion yuan in 2020 to 111.7 billion yuan in 2022.

Similarly, in the southern part of Jiangxi, Ganzhou, capitalising on its resource advantages and industrial base, has introduced innovation incentives and favourable policies for digital infrastructure, and to attract talent to support the sector.

Ganzhou’s focus on new-energy development includes steel-shell lithium batteries, pouch-cell batteries and industries relevant to the industry chain.

It said further efforts are also expected to nurture specialised and sophisticated enterprises that produce new and unique products.

Ganzhou Haohai New Materials Co Ltd, a company specialising in recycling waste lithium batteries and other lithium-containing materials, is located in Longnan, Ganzhou.

The company saw revenue from its main businesses reach 120 million yuan in 2022.

“Thanks to government support, we managed to commence production quickly, providing a sense of confidence to seize opportunities in a favourable business environment,” said Liao Longjiang, an executive at the company.

As a key part of Ganzhou’s efforts to develop the lithium battery industry, Longnan, where Ganzhou Haohai is located, is striving to build a 100 billion yuan lithium-battery industry cluster, said Long Haibin, deputy mayor of Longnan.

In western Jiangxi, Xinyu, a city home to over 70 lithium-battery companies including several industry leaders like Ganfeng Lithium, has formed a relatively complete industry chain with products being exported to the United States, Japan, South Korea and some European countries, according to the local government. — China Daily/ANN


*Food for thought

 

[Frank]

Lithium (Fastmarkets Hydroxide CIF China, Japan and Korea)​

2023 Start: US$83,500/t
2023 Finish: US$16,580/t
High:US$83,500/t (January 1)
Low: US$16,580/t (December 29)
% Change: -80.14%


Lithium prices could never stay where they were, a level even Pilbara Minerals chief Dale Henderson said no one ever predicted or thought imaginable.

But it was the velocity of 2023’s price fall, which helped drag lithium-ion battery pack costs to a record low price of US$139/kWh in late 2023, that caught everyone off guard.

In September, Core Lithium was toasting a maiden profit, a reward for kicking its Grants lithium mine and broader Finniss project in the Northern Territory into gear in quick speed despite recovery issues and changes that would see it produce a little over half of the spodumene concentrate it initially planned.

By the start of January mining had been halted off the back of what Core said was an 85% fall in prices.

Initially Australian producers were shielded from a fast collapse in chemical prices. Lagging contract measures and a shortage of raw materials vis-a-vis processing capacity in China ensured the spodumene price remained profitable through most of the year.

But even the mighty Greenbushes mine was forced to curtail production amid a price fall as 6% Li2O spodumene prices fell from over US$8000/t (more in the US$4000-6000/t range as far as contracted volumes were concerned) to spot levels of a little over US$1000/t.

For producers selling product below the benchmark — pretty much all of them as higher prices incentivised lower product grades which improved overall recoveries — prices are certainly pushing on cash costs.

Will there be a shakeout of the lower quality producers? That remains to be seen. The majors certainly have the cash now to pounce if M&A becomes attractive again.

But there could be wariness given the historical volatility of the sector and the premiums even pre-development and exploration plays have commanded.

Liontown Resources was set for a top of the market — $6.6 billion — sale to America’s Albemarle last year before Gina Rinehart’s Hancock Prospecting built a $1.3 billion blocking stake that scuppered the sale and pushed its share price back to $1.48 (against the $3 bid price) yesterday.

Hancock has also partnered with SQM in a $3.70 per share bid — $1.7 billion — for pre-resource Pilbara explorer Azure Minerals, a sign the big dogs will still pay top dollar to own the yard in preparation for a future boom.


UP

• History tells us lithium price crashes like this tend to lead to underinvestment in new supply, and potentially higher prices down the line.

• DOWN
  
  
• Bears expect new sources of production from Africa and swing output in China could keep the lithium raw material market oversupplied in the near term.

Stockhead.com

AustralianSuper ups stakes in Pilbara Minerals​

Pension fund AustralianSuper has raised its stake in lithium miner Pilbara Minerals and alcohol retailer Endeavour Group, two separate exchange filings showed on Tuesday.

The stake increase makes AustralianSuper the largest stakeholder in Pilbara with a 6.1% interest, overtaking a Ganfeng Lithium Group subsidiary, which owns 5.74%, according to LSEG data.

AustralianSuper maintained its position as the third-largest shareholder in Endeavour, building its stake up to 8.8% from 7.65%.

The country’s largest pension fund, which manages over A$300 billion ($201.27 billion) of retirement savings, declined to comment on the stake increases.

AustralianSuper has, in the last few months, shifted its attitude towards investing in some of the country’s largest companies, and is now actively scooping up stakes in blue-chip firms to give itself more leverage and control on strategy.

It bought Pilbara shares worth A$558 million in November last year, at a time when domestic lithium miners were being closely watched by global players as acquisition targets.

www.mining.com

 

[Winenut]

Thought I would add this to the above post from @Flight996 because in my experience these three investment banks are the biggest manipulators of commodities I have seen in all the years I have traded and invested in shares.

It’s deceptive how often they downgrade commodities so they can scoop them up then conversely say there will be an increase in demand leading to a supply deficit when they want to sell them.

It’s how they works make money but it’s the inexperienced and poorly informed investors that get caught by this.

To be honest I didn’t even read the article, I’ve read the them too many times over the years I just thought I would add it to this thread

Lithium

Citi and UBS weigh in on lithium rally: Don’t assume low is in yet​

By Carl Capolingua
Wed 06 Mar 24, 1:28pm (AEDT)

Source: Shutterstock

Stocks in article​

IGO
MktCap:
$5.8B
PLS
MktCap:
$12.3B
MIN
MktCap:
$12.5B
LTR
MktCap:
$3.0B

Commodities in article​

Lithium
KEY POINTS

• Lithium prices crashed in 2023, but have experienced a modest rally in 2024
• Many ASX lithium stocks have suffered massive share price falls, but are now starting to recover
• The recent rally has triggered commentary from two brokers, both who warn about irrational optimism

News Flash: Lithium prices have turned!
You probably knew this, after all, who hasn’t been following the trials and tribulations in the lithium market lately? And why not, the moves have been breathtaking. Just looking at lithium carbonate futures, we’re talking about a 46% rally since the December low of RMB 85,400 to the RMB 125,000 peak on 4 March.

The lithium carbonate price has rallied strongly since December​

There’s two big buts here:

• Big but 1: Even at the 4 March peak prices were still down around 80% from the all-time highs; and,
• Big but 2: The price tanked 5% yesterday so it’s clear that the sellers aren’t completely done just yet (dun-dun-duuuun!)

The boffins at major brokers Citi and UBS have also noticed the fledgling lithium rally, and in separate research notes released this morning, they’ve weighed in on its likely sustainability.

Citi on the lithium rally​

Citi says lithium demand growth “remains strong”, but as far as the current rally goes, they’re “waiting on [the] supply response at current prices”. The broker has formed a view that “lithium prices have bottomed near-term and that long-term demand growth rates remain intact”.

The reasons for Citi’s optimism are drawn from a recent chat with consultant Chris Berry of House Mountain Partners. Berry suggests as much as 200kt of lithium carbonate equivalent (LCE) supply is “either not economical or at risk at current prices”.
The pivotal factor determining near-term price action is whether this supply withdraws from the market or continues to commit. Citi agrees with this view but notes there are few other “short term positive catalysts” to support the current rally. Still, they believe prices can “slowly move up towards ~$20k/t” by the end of this year.
US$20,000/t equates approximately RMB 144,000 at the current exchange rate. This is a tidy premium to the current spot lithium carbonate price of RMB 107,500/t. If Citi’s price prediction is correct, lithium bulls could enjoy a solid recovery in ASX lithium stocks this year.

In the longer term, Citi again cites Mr Berry’s analysis which suggests the lithium price recovery may continue beyond 2024. Here are a few bullets from Citi’s analysis which are likely to have the greatest positive impact the lithium market in the long term:

• As more battery capacity comes on stream, battery costs will fall to achieve parity between EVs and internal combustion engine (ICE) vehicles by 2026-27
• Lower battery costs will drive greater EV penetration (to 20% in Western markets)
• Higher costs of funding and low lithium prices have “begun to take a toll on large market participants” and this will crimp supply in the medium term, Berry forecasts a significant supply deficit (200kt/p.a.) over the next 10 years
• Around 200kt of lepidolite supply is at risk at spot prices, and some Australian spodumene producers are also compromised, suggests a price floor around US$20,000/t-US$25,000/t “is needed to incentivize new supply”
• Chinese lepidolite is unlikely to flood the market as producers are “not vertically integrated”, would be required to achieve this to operate at current prices

UBS on the lithium rally​

UBS is also sounding an optimistic tone on short-term lithium prices. They suggest “more supply has been curtailed, slowed or delayed” since their last update on the lithium market. This has caused the broker to slash their expected 2024 surplus from 142kt to 94kt. To put this into perspective, it’s the difference between 6 weeks of market supply and just 4 weeks.

Reasons for the curtailment include a slowing in Chinese lepidolite supply, environmental inspections in China, delays and production cutbacks at key major producers, and “new projects are being pushed out”.

UBS suggests recent market moves reflect “progress towards rebalancing” but warns “it could be transitory if price sentiment lifts too far too fast”. The broker is concerned market participants will view the recent rally as the much-anticipated restocking rally and overestimate the sustainability of short term demand, when in fact the market remains in surplus.

If market participants choose to restart supply in anticipation of higher prices, UBS is concerned the rally will die out swiftly. “For now, we don’t see enough potential demand growth to absorb possible restarts”, they say. In this scenario, UBS expects “sideways/lower futures prices” until the end of June.

Assuming the supply side can restrain themselves, UBS notes there some restocking is currently underway and this could assist prices to be “well bid in March/April”. But even with supply side restraint, UBS believes “as restocking completes and environmental inspections normalise, we see the current rally fading into mid-year.”

On equities, UBS suggests ASX lithium stocks have “run ahead of fundamentals and are pricing in well above spot/our revised forecasts”. As a result, the broker has cut its rating on IGO (ASX: IGO) from NEUTRAL to SELL (i.e., the same rating they have on Pilbara Minerals (ASX: PLS)and Mineral Resources (ASX: MIN)) and has also cut its rating on Liontown Resources (ASX: LTR) from BUY to NEUTRAL.

Conclusion​

Clearly the lithium market is in a far more balanced position than it was before December’s nadir. However, according to our learned friends at Citi and UBS, it remains in a state of substantial flux and there’s great uncertainty as to whether “the low” is in. Lithium investors should be mindful that prices can overshoot to the upside, too.

https://www.marketindex.com.au/news/citi-and-ubs-weigh-in-on-lithium-rally-dont-assume-low-is-in-yet

Totally agree Dave

I remember buying a coal stock back in the day that had a glowing report from Macquarie I think.

I read the research and had a go

Next fucking research article was like doom and gloom and total opposite with a different researcher and only a week or two later....no shit

Cost me fucking heaps

I still think now I would have had a decent case to sue the fucking arse off them for either decpetive practice or simply fucked and inept analysis

Still hold the stock

Been suspended and can't even sell it to offset some gains

Been years and coal's really popular now.....

Learnt the hard way to trust my own research and insticts and fuck the instos and investment banks right off......or......do the opposite of what they "promote"

 

[Flight996]

I fully endorse all your comments and sentiments about the unethical and deceptive practises employed by these financial behemoths. The rules seem to not apply to them.

Unfortunately, they are also the voice of the west, which many are hoping will ride in and smite the evil Zijin/Cominiere tag team.

While not endorsing Zijin's behaviour, at least it is up front and transparent about its lies, deception and theft on a truly global scale. It thieves from everyone equally.

Cheers
F