Albemarle plans more lithium tenders in June

Lithium producer Albemarle has told Argus that it plans to issue further lithium tenders this month, aiming to offer lithium carbonate on 5 and 19 June.

Albemarle last week concluded a tender for 10,500t of 5.46pc chemical grade spodumene at $1,236/t (Yn8,959), around $100/t higher than the average price of comparable spodumene spot price indexes on a cif China basis during May.

Albemarle is continuing to issue tenders, with another 16,200t tranche of spodumene offered on 31 May and further lithium carbonate tenders taking place later this month.

"We are planning bidding events for the entire year at a frequency of around one per week. We are currently planning to offer... 100t of battery-grade lithium carbonate on 5 and 19 June on an ex-works China basis," Albemarle said.

The company's strategy is to "increase the quality and visibility of pricing information" in the lithium market with these public sales, it said, and it will potentially contribute the price of the tenders directly into indexes in the future.

Regional spot prices disconnected

Publicised producer sales of spodumene have exposed a disconnect between large producer sales, regional spot prices and spodumene indexes in China over the past few months, owing to key differences between the conditions of large tenders compared with the spot market. Argus assessed spodumene prices at an average of $1,117.50/t on a cif China basis during May.

Market participants have opposing views on price direction, with consumers in China posting low spot offers, especially to new lithium producing regions such as southern Africa, while large, established producers in Australia and South America drive for higher prices in negotiations. The gulf between regional spot prices and large producer tenders was explained by one trader as a symptom of these producers' power in the market.

"These companies have 10,000t ready to go on the ground. In some of the smaller mines in South Africa and Zimbabwe, most can't do that and can't offer the security of supply yet. So it's an issue of trust commanding higher prices," the trader explained.

Argus has heard some low prices in recent days, with one trader in southern Africa offered less than $800/t for spodumene at 5.5pc, while another offer from a Chinese lithium refiner for 2-4pc spodumene was heard at $450/t. Another market participant indicated a price of $1,054/t in Maputo for 5.5-6pc spodumene in early May.

Traders have said that some material available in southern Africa was of variable quality, with the delivered material often not crushed and yielding lower grades than claimed, keeping prices for material from the region low in comparison with Australian material.

"Some of the new African mines are not sending crushed material, so it's a gamble. The more artisanal stuff is coming in big rocks. They need to crush it and then sort it to command the type of prices the Aussies get," one trader said.

The combination of lower-priced African spodumene, of varying grades, combined with the spot buying power of some Chinese buyers may be weighing on index pricing, further exacerbating the difference between spot prices and producer tenders.

By Thomas Kavanagh