[SMM Cobalt and Lithium Morning Meeting Summary] Customers Rush for Installations and Stockpile, Overall Demand for Anode Downstream Improves

Lithium Ore:

At the beginning of this week, lithium ore prices slightly increased along with lithium carbonate prices. For spodumene, the persistent sentiment to stand firm on quotes from overseas mines kept ore prices at high levels. Occasional reports of high-priced lithium ore transactions provided strong support for current price levels. On the demand side, non-integrated lithium chemical plants maintained a steady demand for lithium ore, with purchase willingness strengthening recently as spot and futures prices rose. Overall transaction prices increased slightly. For lepidolite, due to limited spot availability, prices remained high under the condition of undersupply. Lithium ore prices are expected to continue fluctuating rangebound with lithium carbonate prices.

Lithium Carbonate:

At the beginning of this week, lithium carbonate spot prices showed an upward trend. Currently, some downstream enterprises have yet to sign long-term contracts, resulting in just-in-time procurement demand. Coupled with pre-Chinese New Year stockpiling, the lithium carbonate spot market saw relatively active transactions. Relatively positive inquiry and procurement activities boosted the sentiment of lithium chemical plants and traders to stand firm on quotes and raise prices. Today, the transaction price center of lithium carbonate spot prices moved upward. Considering logistics and transportation factors, this week will be the final period for lithium carbonate procurement. Lithium carbonate spot prices are expected to have slight upside room, accompanied by sideways movement.

Lithium Hydroxide:

At the beginning of this week, lithium hydroxide prices continued to rise. In the market, the supply side showed a strong willingness to sell to adjust inventories. On the demand side, some material manufacturers and traders, due to slow progress in long-term contracts and limited locked-in volumes, coupled with logistics challenges during the Chinese New Year travel rush, exhibited strong purchase willingness recently. Transactions were relatively active, with most transaction prices either matching quotations or offering only slight discounts, providing strong support for upstream chemical plants to stand firm on quotes, further pushing up the transaction price center of lithium hydroxide.
As the Chinese New Year travel rush begins in the latter half of this month, combined with the hazardous nature of lithium hydroxide, ternary material manufacturers are expected to conclude stockpiling soon, which may weaken the support for lithium hydroxide price increases.

Refined Cobalt:

This week, refined cobalt prices dropped slightly. On the supply side, spot availability in the market remained sufficient. On the demand side, the overall market was relatively quiet at year-end, with weak spot purchase willingness. From a market perspective, as the year-end is an off-season for the industry, overall trading sentiment remained subdued. Next week, with logistics and transportation expected to halt, spot market trading sentiment may remain quiet, and refined cobalt prices are likely to remain relatively stable.

Intermediate Products:

This week, cobalt intermediate product prices dropped slightly. On the supply side, port arrivals continued, ensuring sufficient spot supply. On the demand side, downstream cobalt smelters showed reduced just-in-time procurement willingness, resulting in limited overall trading volume. Considering the market situation, the current market is in a state of oversupply, putting downward pressure on spot prices, which declined slightly.

Cobalt Salts (Cobalt Sulphate and Cobalt Chloride):

This week, cobalt salt prices remained stable. In terms of supply, cobalt salt production declined due to generally low operating rates at smelters. On the demand side, the ternary cathode precursor and Co3O4 markets showed weak willingness for pre-holiday stockpiling, leading to continued sluggish demand for cobalt salts. However, supported by raw material costs, cobalt salt producers reduced their willingness to sell at low prices, keeping market prices stable for now. Next week, with no substantial changes expected in market supply and demand, spot prices may still face slight downward pressure.

Cobalt Salts (Co3O4):

This week, Co3O4 market prices remained stable. On the supply side, Co3O4 smelters slightly reduced supply. On the demand side, demand in the LCO market remained relatively stable, mainly driven by basic inventory replenishment, with limited trading volume. Next week, as downstream LCO inventories are relatively low, there may be some just-in-time stockpiling demand. With an increase in inquiries, Co3O4 spot prices have the potential for slight increases.

Nickel Sulphate:

As of today, the SMM battery-grade nickel sulphate index price stood at 26,423 yuan/mt, with the quotation range for battery-grade nickel sulphate between 26,050 and 26,950 yuan/mt, and the average price remained unchanged WoW. On the demand side, most precursor producers have completed January stockpiling, with only a few enterprises still needing to restock. Market trading volume was relatively limited, and overall transaction activity remained low. On the supply side, the market circulation of nickel salts tightened further, and finished product inventories at nickel sulphate producers remained low. Some nickel salt producers with cost inventories have suspended shipments due to current losses. The tight supply situation and losses further boosted the sentiment of nickel sulphate producers to stand firm on quotes. In the short term, given the tight market supply, nickel sulphate prices are expected to continue rising.

Ternary Cathode Precursors:

At the beginning of this week, prices for 5-series consumer-grade, 6-series consumer-grade, and 8-series power-grade ternary cathode precursors remained unchanged WoW. In terms of raw materials, prices for nickel sulphate, cobalt sulphate, and manganese sulphate remained stable. From the supply perspective, as the Chinese New Year approaches, demand in the spot order market weakened, and precursor producers mainly focused on fulfilling long-term contracts. From the demand perspective, although some material enterprises expected production increases, most producers reduced production, resulting in relatively weak overall demand. Looking ahead, from the cost side, nickel sulphate and manganese sulphate prices are expected to rise, while cobalt sulphate prices may decline. Therefore, prices for ternary cathode precursors across different series may increase to varying degrees, with high-nickel products seeing relatively larger price increases and low-nickel products experiencing smaller price increases.

Ternary Cathode Materials:

On Monday, the raw material market for ternary cathode materials showed the following trends: sulphate prices remained stable, while prices for lithium carbonate and lithium hydroxide continued to rise due to active pre-Chinese New Year stockpiling by downstream enterprises. This trend provided some support for raw material costs of ternary cathode materials, leading to price increases for 5-series, 6-series, and 8-series ternary cathode materials today.
Supply side, although the production schedule of domestic ternary cathode material enterprises in January slightly decreased, the reduction was limited. Meanwhile, the operating rate of overseas ternary cathode material manufacturers remained at a low level. Demand side, domestic battery manufacturers' production schedule for ternary power batteries before the Chinese New Year also slightly declined, but the decrease was relatively small compared to previous years. Consumer market, the current purchase willingness for ternary cathode materials was relatively mediocre.

LFP:

This week, the LFP market prices showed signs of stabilizing and rising slightly, with an overall average increase of about 130 yuan/mt. The price increase this week was mainly due to the significant upward trend in lithium carbonate prices, which rose by about 600 yuan/mt. Processing fees remained stable this week, but considering the recent upward trend in iron phosphate prices, coupled with the long-term contract negotiation results between material manufacturers and downstream battery manufacturers, mid-to-high-end material processing fees are expected to rise slightly in the near term. Supply side, the overall operating situation of LFP material manufacturers this week remained relatively active, with no significant production cuts observed. Demand side, the production schedule of downstream battery cell manufacturers was relatively stable, showing a significant increase compared to the same period last year.

Iron Phosphate:

The price adjustment for iron phosphate at the beginning of January has been gradually completed, and prices remained stable this week. The market demand for iron phosphate still aligned with previous expectations, with active transactions in the market. Most downstream LFP customers have accepted the price increase of iron phosphate. However, the price increase does not mean that iron phosphate enterprises can easily turn losses into profits. Due to prolonged losses and delayed payments from downstream, some iron phosphate enterprises still face funding gaps at year-end. Enterprises need to reasonably adjust production schedules to reduce operational risks. As each enterprise in the iron phosphate market adopts different business strategies, price negotiations still exist.

LCO:

This week, LCO prices slightly declined, with prices for 4.2V, 4.4V, and 4.5V LCO at 134,000 yuan/mt, 138,000 yuan/mt, and 149,000 yuan/mt, respectively. The main reason was the weakening consumer electronics demand at year-end, with battery cell manufacturers primarily purchasing as needed, leading to a slight decline in orders and reduced production schedules. The market adopted a volume discount strategy, with some enterprises offering concessions to secure orders. Combined with the weakening prices of lithium carbonate and Co3O4 raw materials, the pressure for spot market price recovery increased. The demand for smartphones, digital products, and e-cigarettes was sluggish, and the stocking pace of end-user manufacturers slowed, further affecting the demand for LCO. Looking ahead, LCO prices are expected to maintain a slight downward trend due to continued weak downstream demand and the impact of the Chinese New Year holiday and the off-season at the beginning of the year, making it difficult to change the short-term supply-demand pattern.

Anode:

This week, anode prices remained stable. Cost side, downstream anode market demand remained strong, with smooth shipments from low-sulphur petroleum coke refineries and low inventory levels. Low-sulphur petroleum coke prices may rise slightly this week. However, due to limited demand from downstream anode manufacturers, the overall operating rate of oil-based green needle coke remained low, and needle coke manufacturers are expected to adopt a price stabilization strategy in the short term. Graphitisation outsourcing faced high electricity costs during the dry season, leading to price increase expectations. However, weak demand made it difficult to raise quotes, resulting in relatively stagnant prices. Demand side, current downstream customer demand for anodes was favorable, with low sentiment to press prices, and anode manufacturers reported ideal shipment conditions. Under the backdrop of extremely limited profit margins and the expected demand contraction near the Chinese New Year, anode manufacturers showed strong sentiment to stand firm on quotes. Artificial graphite anode prices are expected to remain stable in the short term.

Separator: This week, lithium battery separator material prices remained stable.

Domestic customers continued to rush for installations, and overseas customers also had plans for early stockpiling. Downstream overall demand was positive, with good material production and sales conditions. Price side, due to previous price wars and continuous price suppression by customers, separator material prices were at a low range. Currently, separator enterprises reported good order conditions, and intense market competition has eased. To ensure stable supply, downstream customers mostly paused price suppression, resulting in overall stable separator prices. However, given the existing surplus capacity and the gradual release of new capacity, separator enterprises may still compete for market share in the future, potentially leading to slight price reductions for separator materials.

Electrolyte:

This week, electrolyte prices remained stable. Supply side, as the year-end approached, market demand declined, and LiPF6 production was based on demand. Electrolyte manufacturers mainly purchased LiPF6 as needed, with stable prices. Demand side, battery cell manufacturers' demand for electrolytes was relatively stable. Cost side, prices of LiPF6, solvents, and additives remained temporarily stable. Currently, electrolyte prices are primarily influenced by LiPF6 prices. However, due to price suppression from battery cells, electrolyte prices remained stable. The price of ternary power battery electrolyte was 21,100-29,550 yuan/mt, and LFP battery electrolyte was 16,800-25,550 yuan/mt. In the short term, fluctuations in the cost side are expected to cause electrolyte prices to fluctuate within a certain range.

Sodium-Ion Battery:

This week, the sodium-ion battery market was relatively calm, with less active transactions as the Chinese New Year approached. Market expectations for sodium-ion batteries mainly focused on applications in two-wheelers, start-stop power supplies, and ESS. Sodium-ion batteries have advantages over lithium batteries in terms of C-rate and low-temperature environments, but further development and exploration are needed. By 2025, related production lines for sodium-ion battery anodes, cathodes, and battery cells are expected to be gradually launched. If effective mass production is achieved, sodium-ion battery costs will further decrease, meeting the growing market demand.

Recycling:

This week, the recycled scrap market prices showed a fluctuating trend. Lithium carbonate prices rose due to stocking demand from material manufacturers. Nickel sulphate prices slightly increased due to tight supply, while cobalt sulphate prices remained stable. Most small and medium-sized hydrometallurgical plants faced long-term losses due to inverted scrap prices. Coupled with minimal year-end price fluctuations, market activity was limited, with some planning to take an early holiday. In contrast, large manufacturers maintained normal production but showed low enthusiasm for stockpiling. Demand side, most hydrometallurgical enterprises had completed stockpiling actions by the end of December. As the year-end approached, enterprises preferred to maintain low-speed operations and were reluctant to accept high-priced black mass. This week, buyers and sellers in the market remained relatively firm on prices, with sluggish transactions. As the Chinese New Year approached, most enterprises showed low willingness to ship or purchase. In the short term, black mass prices are expected to continue fluctuating with nickel, cobalt, and lithium salt prices, while the black mass coefficient is likely to remain stable under weak supply and demand conditions.

Downstream and End-User:

On January 8, Beijing Haibostron Technology Co., Ltd. (hereinafter referred to as "Haibostron") disclosed its prospectus. The company initiated its issuance and will open for subscription on January 16, with the stock abbreviation "Haibostron."
Haibostron plans to publicly issue 44,432,537 shares, all of which are new shares. After the issuance, the total share capital will be 177,730,148 shares. The initial strategic placement issuance quantity is 6,656,626 shares, accounting for approximately 14.98% of the total issuance. Before the activation of the clawback mechanism, the initial offline issuance quantity is 26,443,411 shares, accounting for 70.00% of the issuance quantity after deducting the initial strategic placement quantity. The initial online issuance quantity is 11,332,500 shares, accounting for 30.00% of the issuance quantity after deducting the initial strategic placement quantity. The company's preliminary inquiry time for this issuance is from 9:30 to 15:00 on January 13, and the online roadshow time is January 15.
According to the Shanghai Stock Exchange website, Haibostron's STAR Market IPO was accepted on June 20, 2023, entered the inquiry stage on July 9, 2023, and was approved by the listing committee on October 17, 2023. The registration application was submitted on November 29, 2023. On December 18, 2023, the China Securities Regulatory Commission issued the "Approval for the Initial Public Offering Registration of Beijing Haibostron Technology Co., Ltd.," approving Haibostron's IPO registration application.

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SMM New Energy Research Team

Cong Wang 021-51666838

Rui Ma 021-51595780

Ziya Lin 86-2151666902

Ye Yuan 021-51595792

Disheng Feng 021-51666714

Ying Xu 021-51666707

Yanlin Lv 021-20707875

Yujun Liu 021-20707895

Zhicheng Zhou 021-51666711