Pilbara Minerals (ASX: PLS) could bolster local lithium names after the company’s fourth spodumene auction locked in prices of US$5,650/dmt.
Last October, Pilbara held its third spodumene auction, which achieved a bid of US$2,350/dmt, meaning prices have increased 140% in just 7 months.
Industry players told S&P Global Platts various views about the current pricing environment, including:
“There is still enough margin for lithium converters,” said an international trader
“There is a risk that you could be losing money when you sell the product later on if prices keep dropping,” said a Japanese lithium converter
“Shanghai may come out of lockdown in May. There may be pent up demand,” a trader said
Pilbara Minerals said that it expects to hold auctions on a more regular basis as the Ngungaju project ramps up production and more uncommitted tonnes become available.
It was noted that selling into the spot market is advantageous compared to "typically longer-dated offtake sales arrangements". Pilbara Minerals said this could help it outperform fellow peers in respect to sales prices.
March quarter metrics were in-line with the company’s guidance - and rightfully so after three production downgrades since last August.
Average spodumene prices achieved in the March quarter was US$2,650/dmt, in-line with the prior guidance range between US$2,600 to US$3,000 dmt.
Pilbara Minerals reaffirmed its FY22 annualised production guidance of 340,000 to 380,000 dmt, though flagged that any continuing covid impacts could see production land in the lower half of the guidance range.
The Pilgan Plant Improvement Project was successfully commissioned, re-rating its production capacity from 330,000 tpa to 360-380,000 tpa of spodumene concentrate.
The restart of production from the Ngungaju Plant (acquired from Altura Resources in Dec 2020) was going according to plan, targeting 180-200,000 tpa in production by the September quarter.
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