After production cuts, lithium miner says market has 'stabilized'
(Kitco News) - Galaxy Resources said Wednesday it is on track to meet 2020 forecast production after cutting output earlier this year due to the soft market.
Lithium concentrate production volume for Q4 2020 is expected to range between 25,000 - 35,000 dmt.
The company said in the near term China's improved economy had stabilized lithium prices.
"Market conditions in the lithium sector were challenging for the quarter due to inventory overhang of lithium raw materials and chemicals although recent supply-side curtailments could lead to a tightening of raw material availability for some customers in the near term. Since
the peak of COVID-19 in China, meaningful signs of economic recovery have started to emerge with GDP growth of 4.9% reported for Q3 compared to a contraction of 6.8% in Q1 2020," wrote the company in its near-term outlook statement.
The company said China's strong economy has been "..somewhat echoed in electric vehicle ("EV") sales with positive signs of recovery in the past couple of months, with China recording its first year-on-year increase in 2020, up 19.3% on 2019 levels."
"However, on a year-to-date basis, China still remains 18.7% and 17.7% down on production and sales, respectively. While the sentiment on outlook appears to have stabilized, there is still uncertainty on the exact timing of a significant sector recovery and an increase in demand for raw materials."
Galaxy noted some production disruption to the industry.
"Two production curtailments were revealed this week with Orocobre announcing a COVID-19 related outage at their Olaroz operations in Argentina and receivers and administrators being appointed to Altura Mining and their Pilgangoora operation. It is too early to determine any impact on the market; however, customer inquiries have risen appreciably."