High Voltage: Aussie lithium producers are down 10-40% year to date, but revenues have never been higher
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Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.
It’s all in the headline and it is old news, but bears repeating.
PLS was pulling in US$2,650/t for its spodumene in the March quarter – generating operating cashflow of $113.9m — “with battery grade chemical pricing suggesting another significant step-up in the offtake concentrate sales price during the June Quarter”.
The stuff it is selling onto the spot market is attracting record prices over US$5,650/t.
Meanwhile, costs per tonne were sitting around US$350/t (FOB Port Hedland) at the start of the year.
AKE is currently pulling in $US40,000/t – about 14% above guidance – for lithium carbonate from its ‘Olaroz’ project, and ~US$5,000/t for its Australian spodumene.
It enjoyed an 84% cash margin on spod sales in the March quarter. Imagine that.
Both companies are cashed up; PLS with $284.9m and the end of March, AKE with closer to $US500m.
While red hot Chinese spot prices get all the headlines, a large portion of the market is under long term fixed price and variable price contracts.
Most of AKE and PLS’ sales are under contract.
These prices have generally lagged spot and are still rising.
Of course, there are plenty of macro unknowns right now – a weak Chinese economy, war, recession fears – which could impact on lithium demand.
For me the biggest near-term threat to #lithium prices is the macro outlook & the end of cheap credit. ~90% of new #cars are bought on finance in the #UK, similar in #US. If the #Fed keeps hiking into a looming #recession we could see a hit to all new car sales, #EV or not.
— Peter Hannah (@PHmetals) June 15, 2022
Even so, lithium prices are unlikely to crash in 2023 and 2024, according to Benchmark’s Lithium Forecast.
“Benchmark’s view is that contract prices are likely to continue to rise as a lagged effect of the major step-change in spot pricing over late 2021 and 2022 while spot prices will fall, with the two prices coming into more of an equilibrium than they are now,” it says.
Here’s how a basket of ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, magnesium, manganese, and vanadium is performing>>>
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