Demand for lithium chemicals and spodumene concentrate continued to be strong during the December quarter with published lithium prices again reaching new record highs.

Electric Vehicle ("EV") sales continued to drive demand with December quarter Chinese EV sales reaching record highs at 2.3 million units, a 82% YoY increase. Sales from the key EU countries also posted strong growth at 0.7 million units, up 38% YoY during the quarter. Global sales are forecast at ~3.5 million units for the December quarter, and annual sales are expected to reach ~10.5 million units representing 57% growth YoY. EV sales growth is expected to remain robust in 2023 given strong order books and potential pent-up demand: consensus forecasts for global EV sales indicate sales could reach over 14 million units in 2023. Supportive government targets and policies announced globally (including subsidies or tax incentives), continue to ensure strong fundamentals for future growth.

Spot prices for lithium carbonate and hydroxide again set record prices during the quarter as demand outpaced supply. Spot prices in China softened marginally during the second half of December with price reporting agencies ("PRA") reporting declines of less than 10% from their peaks in December. This is partially explained by seasonal destocking, scheduled maintenance shutdowns and, reduced working days ahead of Lunar New Year holidays which commences earlier in 2023 than previous years. However, demand is expected to rebound and resume its historical annual growth trajectory following this period as cathode and cell manufacturers seek to replenish stocks.

Outside China, spot prices for lithium chemicals rallied in line with Chinese prices during the quarter but remained more resilient towards the end of December as lower PRA pricing declines were observed relative to China. Ex-China demand remains robust.

Spodumene concentrate spot prices once again registered new record highs, posting gains of 9% PCP and 167% YoY in December reflecting continued tightness in the supply chain for upstream lithium units over this time.

Estimated lithium chemical production in China was up by ~14% quarter on quarter ("QoQ"), largely due to increased production from hard rock sourced lithium supply.

Spodumene concentrate volumes shipped to China from Australia for October and November 2022 were 23% higher compared to the PCP due to new supply from brownfield expansions and restarted idle capacity. Despite this increase, the spodumene concentrate market remains tight with limited material available to the open market due to the majority of the product already being locked under existing offtake arrangements or allocated for internal consumption by integrated producers.