Barrenjoey predicts extended spodumene price rally
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The news: Barrenjoey analysts are predicting the price of spodumene — rocks containing lithium — to rise for the next six to 12 months while a CATL mine in China's Jiangxi province reapplies for its government permit.
The numbers: Spodumene 6% prices — a closely watched lithium benchmark — rallied 7% to $US940 ($1,446.19)/tonne on Tuesday, recording gains of 14% since last Friday and 30.9% over three months.
Barrenjoey analysts predict that the lepidolite (another rock containing lithium) mine closure that came into effect last Sunday, will last at least six months, as the company waits for its permit to be reinstated.
The context: ASX-listed lithium mining stocks Liontown Resources, IGO, Pilbara Minerals and Mineral Resources all benefitted from the uptick in spodumene prices.
Barrenjoey analysts said the price increase, combined with a strong upwards move last Friday, put the current price a full USD220/tonne above analysts' consensus for H2 2025.
If the price stays above USD820/tonne, Liontown, which recently raised $316 million via an institutional placement would burn $257 million less cash than would otherwise be expected after its capital raising, and the three other lithium miners would also benefit, the analysts wrote in a note.
"We think the surge in spodumene price on Friday ... has partially priced in a Jianxiawo (mine) shutdown, although there may still be potential upgrades to lithium prices and earnings to [the four lithium stocks]," they said.
Macquarie analysts were more circumspect, noting that the spodumene futures prices — which largely reflect buyers' expectations — were driving spot prices rather than longer-term supply and demand fundamentals. They also pointed out that many battery chemical manufacturers still had excess lithium carbonate and lithium hydroxide inventories.
The sources: Barrenjoey research, Macquarie research
