According to Reuters news, Australia's lithium carbonate producer Orocobre Ltd and Australian concentrate producer Pilbara Minerals Ltd recently announced lithium inventory statistics, due to a number of downstream chemical manufacturers continue to postpone trading, the lithium market is oversupply, lithium inventory is high. According to the analysis, the global multi-country electric vehicle industry has “cooled down”, and the demand for raw material lithium has declined in recent times, and Australian lithium producers have been affected.
Data show that in the past year, the price of lithium hydroxide, one of the raw materials for lithium battery electrolytes, fell by more than 20%, while the price of lithium carbonate, another raw material, fell by more than 40% over the same period. In response, many lithium mining companies expressed concern and pointed out that this trend is likely to continue. According to the analysis, due to the gradual decline of subsidies for electric vehicles worldwide, the production requirements for electric vehicles are becoming stricter, and some electric vehicle manufacturers have reduced production.
Reuters reported that Orocobre pointed out in its quarterly production report that several Australian lithium product suppliers have received buyer notifications requesting delayed shipments, looking for alternative customers and even renegotiating trade agreements. After the release of production results, Orrocobre business development manager David Hall said in an analyst conference call: "In terms of overall market conditions, we have not seen a good trend in the current stage."
Ken Brinsden, CEO of Pilbara Minerals, said that in the next quarter, the company expects to reduce production to cope with oversupply. He said: "Although major customers are still advancing their downstream chemical conversion production business, this recovery rate is less than expected." It is understood that PilbaraMinerals has shut down a production base in June this year, and plans to go from September to December this year. Close the other two production bases and carry out routine maintenance while maintaining the balance between supply and demand.
In addition, there are also reports that investment banks, including Morgan Stanley, believe that there is an oversupply in the global lithium market. In the absence of improvement, investors are also at risk of evacuation.
Despite the relatively low demand for lithium, Pilbara Minerals said that in order to reduce the company's operating costs in FY 2020, the company will gradually restore the production capacity of the Pilgangoora lithium mine in Western Australia. At the same time, KenBrinsden pointed out: "Based on our past experience, our ability to mine lithium mines for production can capture the capacity of upstream and downstream processing, so we will not increase the current capacity too quickly."
It is worth mentioning that in the long run, KenBrinsden expressed confidence in the future of the company. He said that the company has signed a long-term contract with the Chinese auto company Great Wall Motor, the first shipment will be shipped in August this year.
At the same time, Pilbara Minerals is also seeking other buyers, and has already sold products to Korean company POSCO. In the past quarter, lithium trading volume reached 2,993 tons.