Commodity Spotlight: Record lithium auction, Copper forecast to grind lower, Fertiliser prices ease

Lithium: Another record spot auction

Pilbara Minerals (ASX: PLS) set another record for spodumene prices at its Battery Metals Exchange auction on Tuesday.

The winning bid was willing to fork out US$5,955 per dry metric tonne (dmt), up from April’s auction of US$5,650.

Citi released an interesting note on Wednesday, which was generally bullish on the electrification theme. The investment bank noted:

• Lithium prices should continue to moderate, but remain higher for longer

• Global lithium spot prices have declined around -8% from all-time highs to trade at US$69,000t

• Prices remain extremely high relative to miners’ production costs, and relative to average price levels of US$13,000 over the 2017-2021 period

• Prices are expected to moderate, averaging US$35,000t by 2025

Copper: Volatility with lower prices

Bank of America has observed almost a dozen large copper mine projects ramping up production, likely to flip the market into a surplus in the coming quarters.

Analyst believes copper could be better supplied through 2023, which could cap any further spot price upside.

In the near-term, low inventories will likely keep volatility high, but a slowdown in growth should ultimately push prices lower. 

Source: Bank of America Global Research

Fertiliser: Pullback but still elevated

CRU has observed a pullback in its fertiliser price index, down 50 pts since late March, from a record high of 390.

A part of this weakness is attributed to weaker seasonal demand, exacerbated by buyers stepping back from record price levels.

Source: CRU

On a side note, a Canadian Pacific Railway freight train carrying 43 trains of potash was derailed earlier this week.

Source: Barb Glen Photo