Material Matters: Lithium, Copper & Steel

Commodities | Nov 09 2022

A glance through the latest expert views and predictions about commodities: lithium outlook remains positive, copper set to decline amid surplus, US steel spreads drop. 

-Undersupply underpins strong lithium pricing outlook
-Copper prices could plunge in 2023 but green metal demand on the horizon
-Investors look to US steel spread performance for local readthroughs

By Danielle Austin

Lithium

While the lithium industry reported production misses and delays in commissioning fresh projects in the September quarter, both Macquarie and JP Morgan have lifted their price outlook as demand continues to drive up spot pricing.

Amid a persisting undersupply of lithium, auction prices continue to rise. Both brokers don't see the price easing in the near term as output remains constrained. 

In an indication of how tight the market is, producers have been able to sell low grade spodumene at minimal discounts to converters, while projects continue to face delays. 

Macquarie recommends Pilbara Minerals ((PLS)) and IGO ((IGO)) as its key picks in the sector, noting both offer strong production upside. Forecasts have been lifted for each by 24-152% and 6-103% respectively through FY27.

In addition, forecasts lifted by 6-110% for Allkem ((AKE)) and 14-93% for Mineral Resources ((MIN)). 

Marking to market, JP Morgan's pricing forecasts increased by 44% and 66% in 2023 and 2024 to US$6,500 and US$5,700 per tonne respectively. This broker remains Overweight rated on both IGO and Allkem. 


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