The demand for LFP is expected to fail the traditional seasonal high in September as the orders received by cathode material factories have been less than expected. Therefore, Mysteel estimates that power grade LFP material prices will fall to Yuan 50,000-56,000/tonne through September.
Source: Mysteel
1. LFP profits narrowed in August on poor demand
The power grade and energy storage grade LFP prices dropped to Yuan 67,000-77,000/t and Yuan 62,000-68,000/t respectively in August along with falling lithium carbonate prices.
Specifically, the cost of LFP rose with climbing phosphorus prices as a result of robust demand for agricultural fertilizers, which squeezed the profits of LFP cathode material manufacturers early in August.
Later in the month, the top-tier cathode material manufacturers were increasingly bearish in the face of continuously sagging demand, which further weighed on LFP prices. As such, material manufacturers were more cautious in procuring lithium carbonate.
2. LFP production likely to ramp up in September after de-stocking
China's LFP cathode material production dropped 8.1% month on month at 150,600 t in August, primarily due to soft end-market demand, inconsistent orders from battery cell factories, and cathode material manufacturers' destocking, according to Mysteel survey.
It is expected that China's LFP production will pick up and jump 8.81% MoM at 163,900 t in September with improving production scheduling of manufacturers, which, however, is still subject to the actual market dynamics of both power battery and energy storage sectors.
3. LFP cost projected to keep rising
The cost of LFP is expected to remain high through September. First, industrial MAP prices rose in August influenced by the peak season in the agricultural fertilizer sector, which will extend into September.
Regarding lithium carbonate, the prices still lack momentum as the orders have fallen short during the traditional seasonal high. However, a rally can be expected by the end of September when the demand is likely to pick up ahead of the National Day holiday.
Taken together, LFP cost is estimated to be high in September, putting pressure on material manufacturers.
On the demand side, the material manufacturers generally report fewer-than-expected new orders despite rising risk appetites on a series of stimulus policies. Moreover, some electronics-related orders have been canceled.
Therefore, the market players are generally pessimistic over the demand in September, a traditional peak season. Mysteel estimates that China's ternary cathode material production will fall 3.05% month on month and 4.71% year on year at 53,600 t in September.
In summary, Mysteel projects that the prices of power grade and energy storage grade LFP prices will move between Yuan 50,000-56,000/t and Yuan 44,000-50,000/t respectively through September.
Written by Aggie Hu, huchenying@mysteel.com
