Cobalt salt prices to bottom out as battery production picks up

SHANGHAI, Jul 22 (SMM) – SMM expects prices of cobalt metal to remain in premiums over that of cobalt salts, in Co content, in the short term as prices of cobalt salt nearly bottomed out with an estimated decline of as much as 10% in their current prices. This means prices of cobalt (II, III) oxide could stop falling at 144,000 yuan/mt. 

Power battery producers stepped up operation with improved orders as downstream carmakers updated their technical roadmaps and recovered purchases on new policies for new energy vehicles (NEVs) subsidy. 

SMM learned that Chinese battery manufacturer Contemporary Amperex Technology (CATL) launched a mass production and installation of high-Ni NCM811 batteries, with some other producers such as Guoxuan Hi-tech and TAFEL New Energy researching and testing high-Ni batteries. 

The third and fourth quarters are expected to see the release of a number of models installed with CATL’s NCM 811 batteries. SMM expects that market feedback in the fourth quarter will determine the production of high-Ni batteries in the future. 

Demand for consumer batteries from markets of electric bicycles and power tools remained brisk, especially for cheap lithium manganese oxide (LMO) batteries. However, consumption from traditional sectors such as mobile phone was slow. Replacement demand was limited during the initial deployment of 5G technology.  

Data from the National Bureau of Statistics (NBS) showed that China’s production of mobile phones in the first half of the year shrank 6.9% from a year ago and stood at 810 million units. 

Major producers of consumer batteries reported poor orders for lithium cobalt oxide (LCO) batteries in the first six months of the year, and expected weaker performance for the whole year compared with 2018. 

Prices of refined cobalt extended their declines amid thin trades in the first half of last week, but speculative purchases stemmed the decline in prices in the second half of the week. Large producers of refined cobalt raised offers, but cautious sentiment kept consumers from purchasing. 

Inventory pressure continued to weigh on prices of cobalt hydroxide last week, and trades did not show signs of picking up. 

SMM assessed prices of refined cobalt at 213,000-225,000 yuan/mt in the week to Friday July 19, down an average 2,000 yuan/mt from the previous week. Prices of cobalt hydroxide stood at $7.6-7.8/lb, down an average $0.6/lb.

Prices of cobalt salt were close to bottom out to 170,000 yuan/mt in metal content as smelters withheld from offloading cargoes on poor results in their semi-annual reports. Traders only limitedly reduced prices as they took an optimistic outlook in the short term. Major producers have yet to recover operating rates as of July 19. 

Higher nickel prices bolstered prices of nickel sulphate last week. Low inventories drove some downstream consumers to purchase, but demand did not completely resume. 

Prices of cobalt sulphate came in at 35,000-37,000 yuan/mt, flat on the week, and prices of cobalt chloride slid an average 1,000 yuan/mt, to stand at 41,000-43,000 yuan/mt, according to SMM assessment. Prices of nickel sulphate climbed 1,500 yuan/mt, standing at 24,000-27,500 yuan/mt.

Continued weak demand from the digital market and falling prices of cobalt chloride further dragged on prices of cobalt (II, III) oxide. SMM assessed prices of cobalt (II, III) oxide at 145,000-148,000 yuan/mt, down an average 6,500 yuan/mt on the week.

Prices of ternary precursor nudged up as nickel sulphate prices followed nickel prices higher. Producers of ternary precursor procured nickel sulphate only as required as sellers hiked prices by some 3,000 yuan/mt last week. 

In the week to Friday July 19, prices of both NCM523 and NCM622 climbed 1,000 yuan/mt on the week, to stand at 71,000-73,000 yuan/mt and 77,000-79,000 yuan/mt, respectively.

Considerably weaker demand for battery-grade lithium carbonate grew bearish on the prices. Wholesale prices of battery-grade lithium carbonate purchased by cathode materials mills have slipped to 68,000-69,000 yuan/mt, while prices of industrial-grade lithium carbonate with a grade above 99.2% held firm at 62,000-65,000 yuan/mt. Such high-grade industrial lithium carbonate could be used directly to produce LMO.

For industrial-grade lithium carbonate with a grade below 99.2%, prices stood lower at 60,000 yuan/mt with further downside room. 

SMM assessed prices of battery-grade lithium carbonate at 69,000-73,000 yuan/mt, down an average 500 yuan/mt on the week, and prices of industrial-grade lithium carbonate at 62,000-65,000 yuan/mt, unchanged from a week ago.

Last week, prices of battery-grade lithium hydroxide continued to trend downwards. Cash-in inclination drove market prices to as low as 76,000 yuan/mt, but trades remained sluggish on poor demand. 

As of Friday July 19, prices of battery-grade lithium hydroxide (coarse particle) shrank an average 500 yuan/mt on the week, to stand at 78,000-81,000 yuan/mt, SMM assessed.

Lower prices of cobalt (II, III) oxide and lithium carbonate depressed prices of LCO. Transaction volume slid as downstream consumers doubt continued rises in cobalt prices and kept from purchasing. 

SMM assessed prices of LCO used to produce 4.35V batteries at 185,000-195,000 yuan/mt, down an average 8,000 yuan/mt from the previous week.

Orders at ternary materials producers have yet to resume significantly. Trades were steady in the first half of last week; higher prices of ternary precursors failed to spur prices of ternary materials in the second half of the week on hesitated downstream buyers. 

SMM assessed that prices of NCM523 materials held stable at 125,000-133,000 yuan/mt last week, and prices of NCM 622 also limitedly changed at 141,000-148,000 yuan/mt.

Thin transactions prevented prices of LFP from rising, after prices of raw materials, such as yellow phosphorus, climbed. Orders at LFP producers are unlikely to improve in two months. 

In the week to Friday July 19, prices of LFP used in power batteries stood at 46,000-49,000 yuan/mt, flat from the previous week, SMM assessed.

Prices for lithium manganese oxide (LMO) held mostly stable last week with prices of LMO used in high-energy-density batteries edging lower amid intensified market competition. Sharp decline in demand for ternary materials and LFP after the subsidy cuts prompted cathode materials producers to shift capacity to LMO.

SMM assessed prices of LMO, used in high-energy-density lithium-ion batteries, lost an average 1,000 yuan/mt to stand at 29,000-37,000 yuan/mt, and prices of LMO used in motive batteries held flat at 47,000-49,000 yuan/mt.