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Poor consumption lowers prices of cobalt, lithium salts on week
Jun 17,2019 09:50CST
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Source:SMM
Domestic prices of lithium salts will face further downward pressure as demand falls

SHANGHAI, Jun 17 (SMM) – SMM expects domestic premiums of refined cobalt against prices of cobalt sulphate to fall, and the spread with overseas prices of cobalt to narrow as the foreign market declines. Domestic prices of lithium salts will face downward pressure as demand falls.

Intense competition lowered prices of lithium-ion cylindrical batteries in the week to June 14, to a low of 4 yuan/unit, SMM learned. Offers of type 18650 products with a capacity of 2,500 mAh stood at 6 yuan/unit last week. 

The slow expansion of quality capacity of power batteries caused significant inventory pressure, and this triggered selloffs in the market. As of Friday June 14, prices of prismatic ternary battery cell stood at 0.9 yuan/Wh, and prices of lithium iron phosphate (LFP) battery cell at 0.75 yuan/Wh. 

Domestic trades of refined cobalt remained thin last week as downstream consumers continued to purchase as demand. Costs drove producers to hold offers firm. 

Domestic consumers held off from procuring cobalt hydroxide as they anticipated overseas prices dipping further to levels in the domestic market. SMM expects prices of cobalt hydroxide to slip further this week.

SMM assessed prices of refined cobalt at 235,000-260,000 yuan/mt in the week to Friday June 14, flat from the previous week. Prices of cobalt hydroxide stood at $9.2-9.5/lb, down an average $0.3/lb.

The cobalt salts market extended its weak performance from the start of June. Suppliers of cobalt sulphate were unwilling to lower offers below 40,000 yuan/mt as smelters in Zhejiang and Hunan cut output of cobalt sulphate. This narrowed the premiums of cobalt chloride against prices of cobalt sulphate. 

Prices of cobalt sulphate came in at 40,000-42,000 yuan/mt, down an average 1,000 yuan/mt, and prices of cobalt chloride lost an average 3,000 yuan/mt on the week, to 48,000-50,000 yuan/mt, according to SMM assessment. Prices of nickel sulphate eased 250 yuan/mt on the week, to 23,500- 26,000 yuan/mt. 

Prices of cobalt (II, III) oxide continued to fall as producers lowered offers amid thinner downstream enquiries. There is further downside room expected in prices this week. 

SMM assessed prices of cobalt (II, III) oxide at 170,000-175,000 yuan/mt, down an average 1,500 yuan/mt on the week.

Trades of ternary precursor also occurred at lower prices as demand across downstream battery producers decreased. In the week to June 14, prices of NCM523 and NCM622 both dropped an average 2,000 yuan/mt, sanding at 79,000-81,000 yuan/mt and 84,000-86,000 yuan/mt, respectively.

Prices of lithium carbonate held steady last week. SMM learned that downstream purchases were limited as consumers mostly stockpile lithium carbonate at the start or the end of a month. Producers of industrial-grade lithium carbonate reported smaller orders in June. 

SMM assessed prices of battery-grade lithium carbonate at 75,000-78,000 yuan/mt, and prices of industrial-grade lithium carbonate at 66,000-70,000 yuan/mt, both flat on the week.

The market of battery-grade lithium hydroxide continued to fall, with wholesale prices of battery-grade lithium hydroxide (coarse particle) below 84,000 yuan/mt. SMM expects prices to drop further this week.

Last week, prices of battery-grade lithium hydroxide (coarse particle) shrank an average 2,000 yuan/mt, to stand at 84,000-88,000 yuan/mt, SMM assessed. 

With a bearish outlook on prices, downstream consumers hesitated over lower prices of lithium cobalt oxide (LCO), and this prompted large producers to reduce offers to clear inventories. 

SMM assessed prices of LCO used to produce 4.35V batteries at 212,000-222,000 yuan/mt, down an average 3,000 yuan/mt from the previous week. 

Poorer consumption also extended sales promotion across sellers of ternary materials, as prices of NCM523 materials fell 1,000 yuan/mt on the week, to stand at 132,000-140,000 yuan/mt, and prices of NCM 622 also shrank 1,000 yuan/mt, posting 148,000-155,000 yuan/mt.

Orders for lithium iron phosphate (LFP) failed to improve in June, and prices of the material remained unchanged at lows last week. SMM expects prices unlikely to pick up in the short term. 

Prices of LFP used in power batteries stood at 47,000-52,000 yuan/mt in the week to June 14, SMM assessed. 

Stable trades kept prices of lithium manganese oxide (LMO) flat last week. New policies that require license plates for using electric bicycles bolstered demand for high-end LMO applied in high-energy-density lithium-ion batteries.

SMM assessed prices of LMO, used in high-energy-density lithium-ion batteries, at 31,000-40,000 yuan/mt, and prices of LMO used in motive batteries at 47,000-50,000 yuan/mt. Both were flat on the week.

Data from the China Association of Automobile Manufacturers (CAAM) showed that China’s new-energy vehicles (NEVs) sector continued to expand in May but with slower year-on-year growth since 2018. NEV sales in May climbed 1.8% from a year ago, to 104,000 units, compared with a buildup of 18.1% in April.

Industrial data showed that production of LMO batteries rose considerably in May, to 1.1GWh, up 455.8% from April. China’s production of power batteries totalled 9.9GWh last month, up 35.6% from the previous month. On a monthly basis, the output of ternary batteries expanded 49.5% while production of LFP batteries lost 16.9%. 

SMM data showed that installed capacity of power batteries in China stood at 5.68GWh in May, up 4.94% on the month and up 22.3% on the year. Among this, ternary batteries accounted for 66.1% and lithium iron phosphate (LFP) batteries took up 30.5%. 

Market commentary
Lithium
Cobalt

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