MELBOURNE, Jan 30 (Reuters) – Australia’s Orocobre Ltd and Pilbara Minerals Ltd on Thursday gave bearish outlooks for lithium demand, as weak orders from electric vehicle makers in China look set to extend a prolonged downturn.
Orocobre Ltd flagged a tepid market for the first half of 2020 and said it had cut costs at its flagship Olaroz lithium project in Argentina. Its shares sank 3.7%.
Pilbara Minerals said it was continuing to moderate production to “match customer demand” after scaling back mining at its Pilgangoora operations in Western Australia in September. Its shares slid 12%. Lithium miners faced severe pressure last year as prices plummeted after a cut in EV subsidies by China, the world’s biggest electric vehicle market.
That pressure is set to extend well into 2020, as prices for spodumene, a hard rock concentrate produced mostly in Australia, have continued to fall and stockpiles have grown.
“If you are a concentrate producer, you are struggling. You do have inventories in the supply chain that are yet to be worked through, you have capacity that is still in excess of demand,” said Reg Spencer, an analyst at broker Canaccord.