On September 14, Australian lithium mining company Pilbara held the second spodumene concentrate auction. The final auction price showed 2,240 US dollars/dry ton, which continued to reach a record high, far exceeding the current mainstream price of lithium concentrate of around 1,000 US dollars/dry ton, which can be said to be the market expectations of large supermarkets. As early as July 29, at Pilbara's first auction, when only 17 bidders participated, the final transaction price reached a high price of 1,250 US dollars/dry ton at that time, and this time it even broke through the 2,000 US dollars/dry ton mark.
This year, due to the overall acceleration of terminal NEVs, when the fuel vehicle market was weak, sales of new energy vehicles bucked the trend and soared. In January-August, NEV sales were 1,479,000 units, up 202.1% year-on-year. There was a strong differentiation from traditional fuel vehicle trends. The penetration rate also reached 11.6%, a significant increase from the 5.8% penetration rate in 2020. The high boom in new energy vehicles has also caused the entire upstream lithium product line, such as lithium carbonate and lithium hydroxide, to enter a high boom phase where prices have accelerated. Among them, prices for electric carbon and lithium hydroxide have risen from around 65,000 yuan at the beginning of the year to 140,000 yuan, and lithium concentrate has also risen from around 400 US dollars/ton at the beginning of the year to 950-1,000 US dollars/ton today. The lithium concentrate was auctioned at a high price of 2,240 US dollars/dry ton this time, and the corresponding lithium carbonate cost was around 167,000 yuan/ton. It can be seen that the price increase trend of lithium products will continue.
The prices of both auctions were very different from mainstream prices in the market. The Wall Street Insight and Insight Research Institute believes the reasons are as follows:
(1) Due to the previous unilateral decline in lithium prices, production expansion plans for some Australian mines have been delayed. There is little additional supply in the short term, while most Australian lithium mines are mainly underwritten by long-term orders. The supply is locked down by long-term agreements, so the number of loose orders that can be circulated is extremely small. However, at present, lithium concentrate is clearly in short supply. Pilbara is currently the largest supplier in the bulk order market, so some bulk order auctions are highly competitive, and Pilbara's high prices also reflect more realistically the current shortage of concentrate in the market.
(2) In addition to price, size is also a part that needs to be considered. Compared to the tens of thousands of tons of long orders signed by large manufacturers, the volume of concentrate in Pilbara's auction is actually very small. The first auction on July 29 was only 10,000 tons of lithium concentrate, which is equivalent to less than 1,000 tons of lithium carbonate equivalent, so it is more likely that small manufacturers will participate in the auction, which will not cause a big disturbance to the market. Later on, as the Pilbara auction platform will launch Altura concentrate production, a total of 20-230,000 tons of concentrate will be auctioned, which will attract more manufacturers to bid.
(3) Both prices far exceeded mainstream prices at the time. While this showed that lithium concentrate was in short supply, it also showed an upward trend in the price of lithium concentrate. The first auction was a high price of 1,250 US dollars/dry ton. At the time, the mainstream price was still around 700 US dollars/ton. Now, a month later, the price has risen to 1,000 US dollars/dry ton, close to the auction price of 2,240 US dollars/dry ton. It may affect some long order pricing centers in the short term. It is expected that lithium concentrate will continue to maintain the price increase trend in the second half of the year.