While noting 2023 has been softer for lithium amid a “disconnect” between China pricing and the rest of Asia, Mr Stanning said recent data indicated that was changing.
It comes as analysts from Morgan Stanley and Citi have been speculating lithium prices could finally be on the rise after a five-month sell-off.
“The last few weeks there’s some public indices out there . . . which are showing that prices are turning,” he told a Gold Coast conference on Wednesday.
“Now I’m not into crystal ball-gazing short term, most commentators are saying they think prices will turn this year, but what I am very confident about is the longer-term outlook for lithium.”
Mr Stanning told the Resources Rising Stars conference that Pilbara Minerals saw a “really significant lithium deficit appearing,” noting 13-21 Pilgangoora projects would be needed to fill the expected deficit by 2040.
The WA company earlier this year approved a $560 million expansion at Pilgangoora that will nearly double production of spodumene concentrate at the mine near Port Hedland to one million tonnes a year.
Citi analysts are forecasting the lithium market will rally 25 to 40 per cent this year, adding to expectations of an improving outlook for the battery metal.
Lithium prices in China have rallied to $US28,000 a tonne in the last two weeks after plunging 70 per cent in the past five months to a low of $US22,000/t, they said.
“We recommended clients buy lithium . . . on the back of an anticipated improvement in China’s EV market and the return of battery restocking in 2H23,” analysts said in a note to clients.
“We reiterate our bullish lithium view into year end, targeting around ~35-40k/t (25-40% upside).”
Analysts noted lithium carbonate prices in China were “no longer in free-fall and appear to have bottomed out”.
While demand from downstream buyers remains tepid, they said buying interest had improved and restocking in the second half of the year should drive prices higher.
Citi upgraded its near-term price target for carbonate to $US32,000/t, up from $US20,000/t.
Analysts pointed out spot domestic lithium carbonate prices have rallied about 25 per cent in the last two weeks and said it was only a matter of time before downstream producers start to restock, supporting higher prices.
Citi forecast a nominal surplus for lithium this year, noting Australian suppliers have flagged higher costs with some miners revising their guidance.
Pilbara Minerals was among them, having hiked full-year cost guidance from between $580 and $610 a tonne to between $600 and $640 a tonne.
Production of Australian spodumene concentrate for the March quarter was broadly flat compared to the three months to the end of December, analysts said, due to maintenance downtimes and operational issues at some miners.
“Commentary from recent corporate reports also indicates increases in costs due to inflation and labour shortages,” they said.
“We forecast a nominal surplus . . . however, new projects remain susceptible to project, commissioning delays, cost blowouts and labour shortages. Delays to volumes could feasibly flip the market back into deficit, supporting prices.”
Morgan Stanley analysts last week said lithium markets appeared to have hit a “turning point” with sentiment in China improving and inventory levels falling.
