Ternary precursor prices to fall further on reduced export orders

SHANGHAI, Mar 25 (SMM) – China's ternary precursor market will likely face continued headwinds of falling export orders for digital batteries and delays in recovery of new energy vehicle demand, as the global spread of the coronavirus has yet to show signs of slowing. This is expected to expand the downside room in ternary precursor prices this week.  

The COVID-19 impact led to recent declines in cobalt and nickel prices in the international market, which has passed on to prices of ternary precursor, a key raw material used in batteries for digital devices and new energy vehicles. 

An absence of demand recovery from power battery market kept operating rates at small and medium-scale battery mills in China at only 40-50%. As major battery producers purchased customised precursor products, trades of the regular NCM523 for power batteries were muted with traded prices below 80,000 yuan/mt as of March 24. This compared with prices of 81,000-85,000 yuan/mt a week earlier, according to SMM assessments.  

While domestic orders from digital battery plants resumed and drove precursor producers to shift their capacity, the virus outbreak reduced demand from the overseas digital battery market. This saw the competition intensified among Chinese precursor mills and trigger steep declines in prices of precursor used in digital batteries. 

As of March 24, prices of NCM523 used in digital batteries stood at 70,000 yuan/mt, with limited purchases by downstream precursor material plants, SMM assessed. Battery producers took bearish prospects for raw materials prices and trades hardly occured at offers above 74,000 yuan/mt.