May 17, 2020

Iron ore prices fall into danger zone

Operations
Iron ore
Australia
Atlas Iron
Admin
2 min
Iron ore prices fall into danger zone
The nightmare for iron ore just wont end as prices for the steel-making ingredient have now fallen below $50 a ton, the first time since April 16.Accord...

The nightmare for iron ore just won’t end as prices for the steel-making ingredient have now fallen below $50 a ton, the first time since April 16.

According to Metal Bulletin Ltd, ore with 62 percent content deliver to Quingdao sank 5.1 percent to $49.60 a dry ton on Tuesday. The index has now fallen for the ninth consecutive days, the longest losing streak since August 18 to 29 last year.

Swiss investment house UBS believes the demand for steel in China has peaked and prices will dip as low as $45 a ton in the second half of 2015.

• Related content: Top 10 Iron ore producers based on 2015 guidance

"We think that there's been too much construction of residential apartments in China," said UBS global commodity analyst Daniel Morgan, who believes extra supply coming to the market later this year will continue to push down prices.

"We've got Roy Hill coming to the market in the second half of early next year, so we think there's a bit of a short-term uplift and it should fade from here.”

Nothing left to cut

The last few months has seen the majority of iron ore mining companies desperately making cuts to reduce operating costs in order to push their break-even price as low as possible. While the last few months has given most miners, including Atlas Iron, breathing room with prices hovering above $60 a ton, many analysts agree it won’t last long.

Earlier this year, Atlas Iron briefly suspended operations at some of its mines when iron ore prices hit $46 a ton. With some assistance from its contractors, the miner was able to resume operations the following month.

David Flanagan, chief executive officer of Atlas Iron told shareholders last month the company could now ride out iron ore prices as low as $45 a ton. Before the shutdown, its break-even price was around $60 a ton. Through its agreement with its contractors, this has been lowered to around $US50 a ton.

USB estimates of break-even prices of BC Iron at $52 a ton, Mount Gibson at $49, and Fortescue Metals Group at $44 a ton. 

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May 7, 2021

Lithium producers bullish as EV revolution ramps demand

Lithium
Electric Vehicles
Albemarle
SQM
3 min
Lithium producers are drawing optimism from rising prices for the electric vehicle battery metal

Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.

Lithium

Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.

Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.

Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.

U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.

Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.

The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.

Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”

Albermarle

Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.

Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.

“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.

The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.

Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.

Electric Vehicles

Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.

Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.

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