1.In terms of the cost
According to related data, since the beginning of 2024, manufacturers producing ternary precursor 523 Poly-crystal have been on profits suffering based on the cost of outsouring raw materials. This means that producers not only face cost pressures but may also continue to be at loss. After the Chinese New Year, the price of nickel sulfate is expected to rise slightly, and the cost pressure of ternary precursors will further increase, which may narrow the profit margin.
Although the production of ternary material enterprises achieved year-on-year growth in the first three quarters of 2024, they failed to meet market expectations in terms of revenue and net profit. Not only that, some companies also suffered significant losses in Q3, further exacerbating their operational pressure. As the Chinese New Year approaches, the profit of 523 Poly-crystal has recovered to some extent, but it is still in a loss state. In addition, there may be a trend for raw materials to increase in price after the holiday, which will increase the pressure on the cost.
2.In terms of the output
As for ternary precursors, the supply of overseas ternary precursors slightly increased in December due to early stocking and accelerated shipment in overseas markets. However, the actual domestic demand has decreased, and some enterprises' production growth was at a low level due to the strict inventory control. At the same time, the production of some non-integrated producers has remained stable or slightly reduced, which collectively leads to relatively small fluctuations in the overall production of ternary precursors. In December, China's ternary precursors production reached 67,600 tonnes, a month-on-month decrease of 0.07% and a year-on-year increase of 16.97%. It's estimated that the production of ternary precursors in January 2025 is 60,200 tonnes, a decrease of 10.88% compared to the previous month and an increase of 13.44% YoY. During the Chinese New Year holiday in January, many companies plan to be at maintenance, resulting in a decrease in production.
In terms of ternary cathode materials, the demand for Xiaomi remained strong in December, coupled with individual companies building up stocks, resulting in a slight increase in overall production. However, it is worth noting that the orders for ternary materials has decreased due to strict inventory control implemented by some battery manufacturers, resulting in most small and medium-sized enterprises having to reduce their production. Thus the spot transactions were not optimistic in January due to the impact of the Chinese New Year holiday. And it is expected that ternary cathode materials production will further decline. China's ternary cathode materials production in December rose 1.31% MoM and 26.77% YoY to 55,700 tonnes. It's likely that China's production of ternary cathode materials may be at 47,200 tonnes In January 2025, a month-on-month decrease of 15.29% and a year-on-year increase of 3.73% due to the Chinese New Year holiday and producers' destocking.
3.Summary
Overall, it is expected that raw material prices will experience a slight increase after the holiday, which may lead to a slight increase in pressure on ternary costs, and ternary material suppliers may have a tendency to maintain price stability. Given that downstream demand has weakened due to seasonal factors, the tug-of-war between supply and demand will become more intense. It is expected that the prices of ternary precursors and ternary cathode materials will show a temporarily stable trend.
