On June 1, foreign media reported that shares in lithium miners plunged after Argentina said it would end what exporters called "improper pricing practices".
Argentina's customs office set a reference price of $53 per kg for lithium carbonate exports to avoid underquoting exports and improve transparency, according to the country's federal Tax office. Argentina is the main host of lithium projects, which are in high demand in the new energy wave. Citigroup analysts led by Kate McCutcheon wrote on Wednesday that reference prices are "essentially a mechanism for customs to require the integrity of substantially different contract prices."
Lithium producers have benefited from a surge in global demand for electric vehicles, driving up prices and sparking fears of shortages. Argentina now has the world's largest lithium portfolio, exporting more than 27,000 tonnes of lithium carbonate last year, bringing in about $185 million.
However, some analysts are already predicting a market peak.
Goldman sachs calls today's lithium levels "basic mispricing, which in turn creates a supply glut response that far exceeds the focus demand trend". In this scenario, Goldman sees a downward trend in prices over the next two years, with lithium prices resetting sharply from today's levels to average just under $55,000 this year. The average price in 2023 is expected to be just $16,372.
Credit Suisse analysts led by Matthew Hope said they believed "the lithium rally is coming to an end and prices will start to retreat" as supply shortages appear to be ending. The firm lowered its price targets and ratings on Allkem and Pilbara Minerals, urging investors to take comfort in their bets.
Lithium stocks have also been hit by a growing belief that prices will peak after Credit Suisse Group Added Goldman Sachs group Inc. to its revised forecast. In North America, Livent was the worst performer on the day, down 14%, followed by Piedmont Lithium, down 13.4%. Heavyweights Albemarle and SQM fell 7.8 per cent and 5.1 per cent respectively. In Australia, Allkem fell as much as 15 per cent and Pilbara more than 20 per cent. Two Chinese lithium mining companies also fell.
On the other hand, lithium prices have stabilised after falling from record highs in April, with Benchmark Mining Intelligence estimating the midpoint of battery-grade lithium carbonate (Made in China, ≥99.5% Li2CO3) at $69450 / tonne in the past week, up slightly from the previous week.
Prices are still up 85% in the first five months of this year, compared with below $20,000 for the same period in 2021. Industrial grade lithium carbonate is valued at just under $65,000, up 1.5% this week.
The phasing out of Shanghai's measures "will return downstream demand to typical levels", Benchmark said.
