In the case of the COVID-19 outbreak last year, the global sales of new energy vehicles can still grow against the trend.

Under the impact of COVID-19, new policies and the decline of subsidies, SMM has recently conducted a visit to the upstream and downstream producers across the Cobalt-Lithium industry chain from September 8 to 11, checking on the production situation of lithium battery raw material plants.

The outlook for the China’s cobalt-lithium new energy industry in 2020 is full of uncertainties with the hampering impact of COVID-19 on global trade. On the demand side, cobalt-lithium new energy (the key downstream application segment), the new energy vehicles (NEVs) and the 3C consumer markets are affected by the global widespread of the coronavirus pandemic, with sharp declines in overseas orders. On the supply side, we saw the suspension of production across mine smelters and port closures as the demand and supply fundamentals has changed tremendously due to COVID-19.

Prices of cobalt salts held stable last week as concerns about raw materials supply tightness waned. Inquiries increased in the lithium market but actual trades were light. SMM learned that demand for cathode materials shows no signs of picking up in June. Limited demand for raw materials may see cobalt prices retreating after seaborne cobalt raw materials arrive at ports. 

Orders for lithium cobalt oxide (LCO) batteries are unlikely to pick up month on month in June as the May-June period is a slack season for consumer batteries. This will not add to demand for battery raw materials such as cobalt chloride and cobalt (II, III) oxide in the coming month. 

China's installed capacity of batteries to power electric vehicles climbed 29.5% from a month ago to 3.6GWh in April, following a surge of 363.2% in the month of March, showed data from the China Automobile Power Battery Industry Innovation Alliance, suggesting the country’s EV sector continues to recover from the fallout caused by the coronavirus pandemic. 

Guangxi Tianyuan New Energy Material has put its 10,000 mt/year lithium carbonate production line into operation, SMM learned.

Demand for Chinese lithium cobalt oxide (LCO), a type of cathode material used to produce lithium batteries, could fall 40% in May, SMM estimates. This is against the backdrop of the coronavirus crisis overseas, which has led to steep declines in China’s export orders and prompted domestic smartphone makers to mull output cut.

Major producers moved up a gear as they accelerated hiring and more workers have returned. Accelerated operations in Hubei were the major driver behind the overall higher operating rate this week.

SMM expects cobalt prices to stay at low levels before the holiday, with little chance of recovery for lithium carbonate