Lithium

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

Fri 27 May 22, 3:09pm (AEST)
Copper 16 Mining Truck
Source: iStock

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Key Points

  • Pilbara Minerals set a new spodumene auction record
  • Bank of America thinks copper's bull run is coming to an end
  • Fertiliser prices backpedal from all-time highs

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. 

2022-05-27 14 13 41-Window
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.

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Source: CRU

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

2022-05-27 14 45 53-Window
Source: Barb Glen Photo

 

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Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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