A Glance of China Lithium-ion Battery Materials Week 5, Mar 2023
▼ Nickel sulfate prices are likely to fall in the short term.
Demand for ternary precursor materials is declining, leading to reduced production by industry leaders. This impacts the demand for nickel sulfate, with suppliers in Jiangsu and Zhejiang provinces cutting production. Overall, the market faces a downturn due to oversupply and weak demand, with prices expected to fall.
▼ Cobalt Sulfate prices may lose some ground in the near future.
International prices are rising, but weak domestic demand in China prevents buyers from entering the market, leading to limited transactions. As traders face increasing cash flow pressure and bearish market sentiment, they are cutting prices to boost sales.
▼ Lithium Compound prices are expect to decline.
Lithium compound prices continue to fall as suppliers flood the market, which may boost downstream demand. But some lithium compounds factories tend to hold firm on prices, leading to fewer trading activities and production halts to ease inventory pressure. The market lacks of large orders and mainly consists of scattered small orders.
-- Ternary precursor prices may remain stable in the short term.
Domestic ternary precursor material demand remains weak, leading industry players to reduce production further. This results in a spiral decline in raw material and ternary precursor prices. Market sentiment is bearish for 2023 H1, with limited demand growth expected. In the face of ongoing price competitions among leading producers, possibly futher squeezing the demand for small and medium-sized businesses' products.
-- Ternary cathode material prices may temporarily stabilize, halting the decline for the time being.
Ternary battery production is set to decline further, negatively affecting demand for lithium compounds and causing a downward spiral in lithium compounds and ternary cathode material prices. Demand for ternary cathode materials is unlikely to improve significantly in 2023 H1, with industry players cautiously waiting for a demand rebound. Lithium compounds prices continue to fall with ternary cathode material profits showing some improvement.
▼ LFP prices are likely to drop in the near future.
The lithium iron phosphate (LFP) market is recovering slowly, with leading battery manufacturers primarily focusing on CR5 LFP material providers. Emerging LFP companies with sustainable mineral raw materials supply strategies are winning favor from top battery manufacturers, leading to increased market concentration for cathode materials. In the lithium-ion industry's slow recovery phase, cost and technical advantages are critical for LFP material producers. Falling lithium compound prices leave LFP without cost support, so the LFP market is expected to remain bearish in the short term.
According to Mysteel data, China's battery-grade lithium carbonate prices have dropped sharply, with a 15.40% decrease in just one week (over the past week), with some deals nearly 200,000 yuan/tonne. Meanwhile, lithium hydroxide (LiOH) prices have also fallen, but not as much, leading to a historic low price difference of 10,000 yuan per tonne between the two products.
The reason for this price divergence is partly due to the difference in China's domestic and international demand for lithium products, which affects the price support for lithium carbonate and lithium hydroxide differently. This situation presents both challenges and opportunities for players in the battery materials industry.
On the one hand, if the domestic supply of lithium carbonate falls short of demand, then international lithium concentrate prices will have a significant impact on the price of lithium carbonate in China. On the other hand, if there is an oversupply of lithium carbonate in the domestic market, downstream demand will be the main factor influencing its price.
Moreover, the concentration of the battery industry is increasing, with top players such as BYD, Tesla, NIO, and LiAuto leading the charge in electric vehicle (ev) sales. In the first two months of 2023, BYD and CATL have a combined accumulated market share of 78.37 in the auto battery industry. CATL launched a "lithium rebate plan", in which automakers will receive a rebate on the price of lithium carbonate for power batteries for the next three years, while also committing to purchasing 80% of their battery procurement from CATL.
Based on the analysis of China's lithium carbonate inventory and the current market fundamentals, Mysteel Research & Consulting estimates the lithium carbonate prices decline will stabilize at the range of 180,000- 200,000 yuan/tonne.
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