January 8, 2018

Lithium prices are set to be robust in 2018, however according to Mining News Net some analysts see this year as the peak.

Article by Kristie Batten

Orocobre reported late last year that it had finalised lithium carbonate delivery quantities for around 85% of planned June half production.

“Tight market conditions have resulted in increased contract prices being negotiated which, combined with orders carried over from 2017, are expected to result in pricing for the June half 2018 approximately 25% higher than prices received in the December half 2017,” Orocobre said.

The company said it would meet its previous pricing guidance for the December quarter of more than US$11,000 per tonne.

“Contract prices are rising in all markets and we expect this to continue in the foreseeable future as new demand for lithium chemicals exceeds new supply,” Orocobre managing director Richard Seville said.

Canaccord Genuity analyst Reg Spencer said Orocobre’s guidance implied average prices of $13,750/t, in line with Canaccord’s previous 2018 forecast of $13,260/t, but noted the second half of the year could be stronger.

“We note that Orocobre’s 1H18 guidance includes delivery into some lower-priced 2017 contracts (up to 50%), which we understand will be mostly closed out in Q117,” Spencer said.

“Assuming pricing of legacy 2017 contracts is at the same level as 2HCY17 guidance, we estimate ORE would require circa $15,000/t average in Q218 in order to achieve pricing guidance (based on our forecast 1HCY18 production of 8000 tonnes).

“In our view, this is a strong signal for continued tightness in the market during 2018 and strong pricing trends for ex-China product (note that SQM achieved an average $13,200/t in Q317).”

As a result, Canaccord has upgraded its 2018 price forecast to $14,300/t.

Deutsche Bank estimates that global demand jumped by 31% year-on-year in 2017 to 279,000 tonnes of LCE, and expects that figure to rise to 342,000t of LCE this year, based on an estimated 25% jump in Chinese electric vehicle sales to just over 1 million in 2018.

“The spodumene market should move into a broad surplus in 2018, but conversion capacity will lag feedstock, restricting finished product supply,” Deutsche analyst Tim Hoff said.

“Suppliers throughout the battery chain have built stocks moving into the low season, so we expect pricing to be reflective of real demand over the next few months.

“New conversion capacity is coming, however much of it is longer dated. On robust demand and constrained supply, we forecast rising pricing into 1H18, with pricing easing later in 2H18.”

UBS expects lithium prices to remain high for some time, though 2018 is set to be the peak.

It forecasts carbonate out of South America (free on board) to average more than $16,000/t this year and just under that next year.

“Demand growth is strong; supply has lifted but not as much as would’ve been hoped for a year ago; meanwhile recoveries and yield loss through the battery chain mean not all supply in situ reports to demand,” UBS said.

“Many of these issues may remain for some years. We think supply will eventually catch up and prices will ease lower but not in the short term.”

Latest News &

All our latest news, speeches, announcements, presentations and media releases from Orocobre Limited. The best way to stay up to date is to sign up for our newsletter.

  • Sales de Jujuy employees ascend Mount Tuzgle

    Sales de Jujuy employees ascend Mount Tuzgle

    Employees of Sales de Jujuy (SDJ), the operating company for Orocobre’s Olaroz Lithium Facility, together with contractors and local community members have ascended Mount Tuzgle (Cerro Tuzgle), a dormant stratovolcano located in Susques, in the Jujuy Province of Northern Argentina. With an elevation of 5,486 m Mount Tuzgle is the highest peak found in the... View Article
  • Orocobre Limited – Supporting women in the mining industry

    Orocobre Limited – Supporting women in the mining industry

    Orocobre Limited is proud to be an equal opportunity employer. As part of constantly seeking ways to enhance our contribution to society and helping to achieve the UN Sustainable Development Goals, we actively develop and employ people from our local communities. In this video some of our female employees share their stories of what it’s... View Article
  • Silvia Rodriguez featured in Top 100 Global Inspirational Women in Mining

    Silvia Rodriguez featured in Top 100 Global Inspirational Women in Mining

    Each year Women in Mining (WIM)* publish the Top 100 Global Inspirational Women in Mining book that showcases a great variety of inspiring women with interesting careers in the Metals & Mining sector. While this publication represents a fantastic opportunity to appreciate the success stories of numerous female role models currently in the sector, we... View Article

Be the first to know.
Subscribe Now.

We will never sell or share this information to anyone. Privacy Policy
© 2018 Orocobre Limited Pty Ltd