SMM News, July 23: LFP prices fell by about 1,650 yuan/mt this week, dragged down by the sharp decline in lithium carbonate prices; SMM lithium carbonate prices fell by about 5,500 yuan/mt this week, and the cost side was a major drag.
Processing fee side, top-tier cathode material companies have issued price increase letters, but the final outcome remains uncertain. Currently, mainstream battery cell manufacturers settle in three ways: linking to phosphoric acid or iron phosphate prices, or a fixed price. Whether the processing fees settled at a fixed price will be adjusted in H2 remains to be confirmed. Pricing model side, top-tier battery cell manufacturers only adopt a price linkage mechanism for their core dependent cathode material suppliers, while most other suppliers still settle at a fixed price on a quarterly or semi-annual basis; mid- and lower-tier manufacturers generally use a price linkage model.
Production and shipment expectations side, industry-wide LFP shipments rose about 7% MoM in July, in line with previous expectations. The main support came from steady growth in energy storage demand and actual orders from the commercial heavy-duty truck sector, while passenger vehicle demand remained stable. Shipments in August are expected to grow 4%-5% MoM, with relatively mild growth, mainly because some new capacity, though already installed, is still in the commissioning phase, limiting effective release. September will see a concentrated volume release of capacity, coupled with a gradual ramp-up in demand for passenger and commercial vehicles, which is likely to form an initial trend of the "September-October peak season". Downstream battery cell manufacturers have not yet finalized their production schedules for August to September. The final round of surveys will be completed at the end of July, at which point a clearer judgment on the actual scale of growth in September will be made.
Currently, the operating rate of LFP plants is close to 80%, but the operating status shows a polarization: high-quality supply from top-tier players is relatively sought-after, while mid- and lower-tier enterprises, due to technical issues, face insufficient orders and are not yet operating at full capacity.
Raw material price side, approaching month-end, iron phosphate enterprises are about to begin a new round of price negotiations with LFP plants. Currently, prices of raw materials such as phosphoric acid have pulled back from May and June, but downstream cathode plants' acceptance of price increases has noticeably weakened. Meanwhile, iron phosphate enterprises are maintaining high operating rates, and with tight supply, they are inclined to hold prices firm, leaving limited room for price cuts. Next week will see a clear adjustment period for iron phosphate prices, and the bargaining is expected to be intense. Non-integrated LFP enterprises continue to face raw material cost pressure, with profit margins remaining under pressure. Downstream demand and inventory side, market demand this week still saw decent growth, with energy storage and commercial vehicle sectors performing particularly prominently. Power battery cell demand remained steady, jointly supporting the upward trend in LFP cathode shipments. Inventory side, some LFP enterprises reported that improving downstream demand led to a decrease in days of finished product inventories, and downstream cargo pick-up enthusiasm improved compared to before.
