The world’s lithium miners — facing an unprecedented demand surge and wild price swings — are shaking up the way the commodity is bought and sold.
“The auctioning of lithium does two things,” said Przemek Koralewski, global head of market development at price reporting agency Fastmarkets. “It allows miners to get the price of the day and it means that the contracts on which most material is sold is truly reflective of market dynamics.” It’s “not unlike how the iron ore market evolved,” said Chris Berry, president at consultancy House Mountain Partners. “These auctions and the increasing liquidity in lithium futures are a good sign.”
Albemarle plans more bidding events ahead, expanding from sales of spodumene concentrate and lithium carbonate to lithium hydroxide. There’s also growing divergences between different products as the supply chain matures. Long-term contracts have historically been linked to the downstream chemicals market rather than the mined raw material, spodumene, that has become a staple source only in the past decade. And the price relationship between the two is breaking down.