[SMM Analysis] how high are the hot orders for enterprises during the Spring Festival this year, and the price of cobalt and lithium is still up after the holiday?

On the 29th of the month of SMM1:

According to SMM research, the start-up of cobalt and lithium factories around the country in February this year was much better than that of last year, mainly due to better downstream demand in the first quarter of this year, a sharp increase in orders from smelters and material plants over the same period last year, and epidemic reasons, many workers were unable to return home and chose to continue production during the Spring Festival.

The operating rate of enterprises with strong demand downstream is relatively high.

Cobalt: this year, large cobalt sulfate factories basically do not have a holiday during the Spring Festival, some enterprises may appropriately reduce the operating rate due to lack of raw materials, and some small and medium-sized enterprises stop production during the Spring Festival. It is expected that the operating rate in February will affect about 10% and 13%. In addition, a large factory of four cobalt has an eight-day Spring Festival holiday, and the overall operating rate of four cobalt has been reduced by about 7% by 9%. Consumer demand is good, large lithium cobalt factories will not stop production during the Spring Festival, small and medium-sized enterprises will appropriately reduce start-up, and the overall start-up is expected to affect only 3%.

Lithium: lithium carbonate enterprises have more maintenance from January to February, including large factories also have maintenance plans, the maintenance time is more than one month, half of the enterprises maintain production during the Spring Festival, and it is estimated that about 15% of the production and supply will be affected in February. The production of lithium hydroxide enterprises is basically normal, only some Sichuan enterprises have stop-production maintenance plans, and the overall impact of starting work in February is relatively small.

Ternary materials and precursors enterprises: large factories of ternary materials and precursors are expected to maintain a high operating rate in February to meet the demand of downstream power orders. some small and medium-sized enterprises choose to stop production for about 8-10 days due to the inability to buy nickel-cobalt raw materials or the high price of precursors, and it is expected that the overall operating rate will only affect 5% and 8%.

Lithium iron phosphate and lithium manganate enterprises: lithium iron market orders are hot, large factories have been in short supply, February is basically full production, small and medium-sized enterprises have also received power and energy storage orders, only some enterprises have a week or so Spring Festival holiday, and the operating rate has only slightly decreased in February. Lithium manganate downstream battery enterprises basically stopped purchasing in mid-January, closed the line holiday at the end of the month, and the downstream demand was weak. Most lithium manganate enterprises also chose to start their holiday at the end of January, basically resuming production at 2.17-2.21, and the operating rate is expected to drop by 50% in February.

Battery enterprises: head power battery enterprises do not have a Spring Festival holiday in February, maintain full production, and fulfill the order demand of downstream car enterprises. The order quantity of some small and medium-sized power battery enterprises is average, and the Spring Festival holiday is about 7-10 days. 3C product orders are good, head consumer battery enterprises have also maintained a high operating rate, and some small and medium-sized enterprises that produce lithium batteries such as portable battery and electric two-wheelers have weakened market demand and basically began to have a holiday in early February.

The supply of cobalt and lithium raw materials is tight in February and the price will continue to rise after the festival.

In terms of logistics: logistics basically stops at the end of the month, and most of the enterprises producing during the Spring Festival have finished their inventory of raw materials, but taking into account the situation of filling orders during the Spring Festival, or choose transport companies that do not have a holiday during the Spring Festival to transport goods, the transportation cost will be greatly increased.

Inventory: the smelter has basically 1-2 months of safety inventory, but taking into account the subsequent shortage of raw materials, inventory is still insufficient. Head battery and materials companies have prepared goods until early March, taking into account the shortage of follow-up raw materials or rising prices and other factors, the recent procurement of March raw materials.

In terms of price: subject to the closure of South Africa, the transportation and supply of cobalt intermediate products was difficult in the first quarter, coupled with the Spring Festival stock, transportation decreased, cobalt salt supply was tight, and prices rose. In February, the operating rate of cobalt salt plant is lower than that of precursor enterprises, the downstream demand is stable, the procurement demand of post-festival material factory is higher, the recovery of logistics and transportation is slow, the supply of cobalt sulfate enterprises is tight, and the price is expected to continue to rise after the festival.

In February, the lithium salt plant stopped production and maintenance, and the supply was tight, while the demand of downstream ternary, lithium iron and lithium cobalt enterprises was still high, the operating rate decreased only slightly, the spot market tightened, and the price may continue to rise after the holiday.

SMM battery materials research team

Mei Wangqin 021-51666759

Huo Yuan 021-51666898

Liu Xiaoyi 021-51666716

Yuan Ye 021-51595792