Pilbara Minerals’ next lithium auction is locked in. Will it be another record breaker?
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All eyes will be on Pilbara Minerals’ (ASX:PLS) third auction on the Battery Material Exchange (BMX) digital platform for 10,000t (SC5.2%) spodumene on October 26.
The second auction went off at an incredible $US2,440/t, singlehandedly sparking a historic 86.5% month-on-month increase for average spod pricing industry-wide.
You can see how the first two PLS transactions (green crosses), being so far outside the trendline, caused the average to spike strongly in July and September:
While the super high price can be partially attributed to the relatively unique and competitive form of sale (open auction), it also verified what has long been suspected – there is not enough lithium being produced to meet current demand.
Punters got a rare look ‘behind the curtain’ of the opaque lithium market, sparking a rush to the doors for lithium stock exposure in July/ August, and – to a lesser extent – September.
Pilbara Minerals will hold its third auction on the BMX for 10,000t (SC5.2%) on October 26, according to Susan Zou, non-ferrous editor at Fastmarkets.
It’s important to note the grade of 5.2% is below the second auction’s 5.5%, and well below the industry benchmark 6%, which fetches a far higher price.
The equivalent headline price achieved for industry standard 6% product in auction two would be $US2,500/t.
Susan Zou, non-ferrous editor at Fastmarkets says bids for the upcoming coming auction “will not be as aggressive”.
“While the market consensus is that spodumene tightness will not ease significantly in the short term – despite Pilbara Minerals now producing spodumene from the restarted former Altura lithium project – the bids for the upcoming auction will not be as aggressive as last time because the ascent of lithium prices in China has slowed after the week-long national holiday compared with September, while the shipment time is months away,” Zou said.
“The latest assessment for spodumene 6% Li2O min, cif China basis was $US2,000- $US2,500/t on Thursday October 15, unchanged from two weeks ago.”