Battery metals bears are out in force but “…… the China carbonate spot price is still >5X the 2020 lows.”

 

• Lithium prices continue to slump amid weak Chinese economic scene
• Albemarle quarterly profit expected lower, while UBS downgrades EV demand outlook 
• But wait… PLS boss is still upbeat on lithium demand, and MinRes grabs more of hot stock Wildcat

Our High Voltage column wraps the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.

 

So then, what’s the general sentiment right now re the world of critical minerals that service the electric vehicle (EV market)?

It’s complicated, but battery metal bears are definitely out and about, leaving burn-out and donut marks behind as they tear around, flipping the bird from souped-up petrol-guzzlers.

“Spot price” action for lithium is certainly slumping and has been for the best part of a year. There’s no getting around that fact right now. (Or is there? See Joe “Mr Lithium” Lowry’s tweet further below.)

As Fastmarkets reported a couple of days ago, “Chinese lithium carbonate prices are down amid bearish sentiment and thin demand, with hydroxide prices flat”. Meanwhile, East Asian lithium prices are down on weak demand and consumer caution, and European and US lithium prices are also following the Asian downtrend, Fastmarkets continued.

So that’s not great.

2023-11-01#Lithium Carbonate 99.5% Min China Spot

Price: $22,848.23
1 day: $-139.32 (-0.61%)
YTD: -69.00%#Spodumene Concentrate (6%, CIF China)

Price: $2,100.00
1 day: $-10 (-0.47%)
YTD: -63.95%

Sponsored by @SiennaResources $SIE $SNNAFhttps://t.co/yFr8De2ixo

— Lithium Price Bot (@LithiumPriceBot) November 1, 2023

 

Then the multinational investment banking giant UBS had to come out this week and further rain on proceedings, issuing a research note that downgrades electric vehicle (EV) demand by between 5 per cent and 15 per cent through to 2030.

Basing that forecast on weaker-than-expected EV uptake in Europe and the US, UBS analyst Levi Spry said:

“We have seen these signals for quite some time now with sequentially declining monthly sales, shrinking backlogs and growing discounts.”

Annnd… then there was a Reuters article on the last day of October titled “Lower prices, oversupply to weigh on lithium miners”.

“Albemarle Corp, the world’s largest producer of lithium, is expected to report lower quarterly profit as prices of the silvery-white metal came under pressure due to concerns of falling near-term demand and oversupply,” wrote Reuters, adding:

“Lithium miners have had a tough year as weak electric vehicle (EV) sales growth led to high stockpiles and sent prices of the metal tumbling down.”

 

But… let’s give the ASX Battery Metals bulls some airspace, too

Lithium expert Joe Lowry, who hosts The Global Lithium Podcast, however, reckons elements of that Reuters article were a “complete miss”, and references a more zoomed-out look at the lithium market’s price action:

“Yes, price is down but from the Chinese panic buying driven highs in 2022. Despite the drop, the China carbonate spot price is still >5X the 2020 lows.”

Great example of a complete miss by @Reuters on what is really happening in the #lithium market. Yes, price is down but from the Chinese panic buying driven highs in 2022. Despite the drop, the China carbonate spot price is still >5X the 2020 lows. https://t.co/RIgtVMVZsv

— Joe Lowry (@globallithium) October 30, 2023

 

And before we look at what’s been turning heads on the ASX in this sector, words from Pilbara Minerals’ (ASX:PLS) CEO Dale Henderson, who was answering questions this week in a recent investor call, pricked up a few ears here and there. (And yes we know, if anyone’s going to be a lithium bull it’s him, but still…)

Henderson alleviated concerns when asked if PLS had trouble selling spodumene on the spot market (just one part of the company’s overall strategy) in the most recent quarter:

“The demand is absolutely there for product,” he said. “It hasn’t been a case of, ‘We can’t move product’, and certainly none of our customers are not wanting product.

“It’s just been more a case of moderating pricing and contending with the question of, ‘What is the right price for the market?’. That’s where the shift has been.”

PLS has still been able to deliver a reasonably strong operational quarter again this time around…

… and the Aussie lithium gun maintains a solid cash position, too, with $3 billion. That’s down 9% from the June quarter but the overall trend is still up when you consider the cash balance figure is roughly $1.6 billion higher than this time one year ago.

Oh, another thing. We noticed this neat graphic from Visual Capitalist, too, which suggests that by 2030, the way things are potentially going, demand for lithium will outstrip supply by 46%.

Lithium is one of the world’s most critical natural resources and is central to our push toward sustainable energy

Our sponsor @energyx asks: with over 350M EVs expected to be sold globally by 2030, can we meet tomorrow’s lithium demand?

Find out: https://t.co/u6IlifjAyU pic.twitter.com/TyAazAdSve

— Visual Capitalist (@VisualCap) October 27, 2023

 

After the recent Liontown Albemarle/Rinehart tussle, and after SQM’s major move for Azure Minerals, the ASX lithium M&A scene is still frothy, still front and centre. Mineral Resources has this week come in hot for stonking 2023 Pilbara lithium-hunting success story Wildcat Resources (ASX:WC8) .

So all that ought to tell you something about how highly prized WA’s lithium land is perceived.

The Chris Ellison-led mining giant has confirmed it’s now bought up almost a fifth of WC8, increasing its stake in the company to 19.85%. WC8 is now up about 13% as a result.

Per The Australian:

“Mr Ellison is also speculated to be a shareholder in Azure Minerals under 5 per cent, and some had suspected he may have been looking to amass more shares in the takeover target of which Mrs Rinehart recently raided, with the billionaire gaining about 18 per cent.

“Wildcat’s market value has soared on the back of promising drilling results of its Tabba Tabba lithium project near Port Hedland in Western Australia.”

$MIN I’m a happy Mineral Resources shareholder with Mr Ellison placing blocking stakes in all the key WA lithium assets. Feel for shareholders of $WC8 $GL1 $DLI $ESS as MIN will squash future value growth in their Favour. pic.twitter.com/qJP2Ur4dxu

— Tony (@HookedOnLithium) October 31, 2023

 

ASX Battery Metals Stocks that are hot:

The week’s biggest gains

WA1 Resources (ASX:WA1) +76%

Bulletin Resources (ASX:BNR) +67%

Heavy Rare Earths (ASX:HRE) +64%

Larvotto Resources (ASX:LRV) +60%

Azure Minerals (ASX:AZS) +49%

 

What’s not:

The week’ s biggest falls

Miramar Resources (ASX:M2R) -37%

Pan Asia Metals (ASX:PAM) -28%

Carnaby Resources (ASX:CNB) -25%

OD6 Metals (ASX:OD6) -23%

 

The post High Voltage: Battery metal bears are out in force but ‘lithium demand is absolutely there’, says PLS boss appeared first on Stockhead.

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