Shares of lithium producers and explorers slumped on Thursday after a closely watched auction by Pilbara Minerals showed a rare decline in prices of spodumene concentrate.
Pilbara Minerals (ASX:PLS) announced its average monthly auction in December achieved a price of $7,552 per dry metric tonne (5.5% spodumene concentrate on a Port Hedland FOB basis), down from $7,805 a month earlier. The price for the 10,000 tonne cargo equates to $8,299 per tonne on a 6% concentrate (CIF, China) basis with deliveries expected from late January 2023.
Pilbara Minerals, which wholly-owns the Pilgangoora mine in Western Australia, was the biggest loser, shedding 11.4% for a market capitalisation of just over A$12 billion ($8.1bn).
Mineral Resources (ASX:MIN), the most valuable lithium share in Sydney with a market worth of A$15.6 billion, gave up 4.7%, Allkem (ASX:AKE) declined just under 5% while IGO (ASX:IGO) fell 4.3%. Smaller Australian players Liontown Resources (ASX:LTR, Core Lithium (ASX:CSO) and Sayona Mining (ASX:SYA) dropped 7.9%, 9.4% and 6.3%, respectively.
The weakness spilled over to North American markets with SQM (NYSE:SQM), the world’s number two producer of the battery metal, giving up 5.1% in afternoon trade in New York, affording the Chilean giant a $24.7 billion market cap. SQM investors are still enjoying a 70% run up in the stock in 2022.
Albemarle (NYSE:ALB), the world’s top lithium miner by output with a market value of $28.2 billion, was left relatively unscathed with a 2.7% decline amid general market weakness on US markets. The biggest loser in New York was Sigma Lithium (NASDAQ:SGML) which fell 6.3%, although punters who picked up the stock at the beginning of the year can point to gains of 185% in 2022.
Benchmark Mineral Intelligence said on Wednesday Chinese lithium prices fell for the first time since May as uncertainty grows about demand in the world’s second-largest economy following the easing of covid-19 restrictions and the looming end of electric vehicle subsidies.
Lithium prices have defied predictions of a sharp pullback, however, and ex-works Chinese battery grade lithium hydroxide is still up 170% year-to-date averaging $81,000 a tonne during the first two weeks of December, according to Benchmark. Lithium carbonate prices have followed a similar trajectory, according to the London-headquartered battery supply chain and pricing specialists.
Benchmark data show spodumene prices up 257% this year averaging some $5,900 a tonne for 6% concentrate FOB Australia in November. Benchmark commented that spodumene contract pricing mechanisms tied to the lithium chemicals spot market had been successfully renegotiated, allowing for a shorter lag time for pricing movements in the chemicals market to be reflected in spodumene pricing.