Allkem rejects lithium fears after share price rout
After copping a battering in its share price last week, Brisban’s Allkem has forecast strong prices for lithium over the June quarter, but a drop in production for the year because of Western Australia’s border closures and tight job market.
Allkemās share price slumped 16 per cent last week over concerns raised by Goldman Sachs about global lithium prices. There was also news out of Argentina about the setting of an export reference prices.
Goldman Sachs last week said that āthe battery metals bull market is over for nowā because of oversupply. It forecast current lithium prices of just under $US54,000 a tonne ($A74,880) would fall to $US16,000/t in 2023.
But Allkem said the market was still strong.
āThe June quarter full-year 2022 average price received for lithium carbonate is expected to be approximately 14 per cent above prior guidance at $US40,000 a tonne ($A55,000) free-on-board on sales of approximately 3500 tonnes, effectively about $US140 million ($A194 million) in revenue.
āCustomers continue to value security of supply which is reflected in a fully committed order book for the remainder of the calendar year.ā
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Allkemās estimated spodumene production for the year had been downgraded by between 2 per cent and 4 per cent due to production delays from the highly competitive West Australian labour market and Covid-related requirements due to the delayed re-opening of the West Australian borderā.
The company said Argentinaās Customs Agency recently set a reference price for lithium carbonate of $US53,000 a tonne which the company said was used by regulators to review export sales of lithium chemicals to prevent under-invoicing and improve pricing transparency.
āThis price is not used for calculation of taxes, royalties or duties and Allkem does not expect it will have any material impact on product exports, realised prices or profitability,ā it said.
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