[2019.07.08 minutes of internal morning meeting of cobalt lithium new energy] Market pessimism shrouded in cobalt lithium prices continued to fall

SMM July 08 News:

Battery Terminal Market:

From January to June 2019, the production of new energy vehicles is expected to be 609000, and the overall output is lower than expected due to poor demand. Considering the continuous impact of the extrusion demand of the "National five" inventory vehicles and the downward pressure on the industrial chain caused by the decline of new energy subsidies, SMM will reduce the production of new energy vehicles in China to 1.5 million in the whole year, and most of this year's target may be met in the fourth quarter.

Upstream raw material price:

Cobalt: electrolytic cobalt prices accelerated, foreign media prices fell below this year's low, the market is even more pessimistic, electrolytic cobalt downstream buyers buy more and more few, only a very small number of transactions. Cobalt hydroxide, due to the overall decline of cobalt products, although the smelter has cobalt hydroxide procurement demand, but the psychological price is very low, is still in a state of game with the buyer. SMM maintained its previous view that the domestic consumer market was relatively stable in the third quarter, the demand of the power market shrank, and the pressure on cobalt intermediate products to reduce prices increased.

Lithium: battery grade lithium carbonate price is lower obviously, industrial grade lithium carbonate price drop slightly lags behind. This is mainly due to the fact that the demand for battery-grade lithium carbonate is concentrated in ternary materials, lithium cobalt acid and dynamic lithium iron phosphate, and the demand and production of ternary materials and dynamic lithium iron phosphate decreased significantly in June, resulting in a reduction in the procurement of upstream battery-grade lithium carbonate. On the other hand, the demand for industrial lithium carbonate is concentrated in lithium manganate and lithium iron phosphate for energy storage, as well as purification and processing into electric carbon. The price decline is partly due to the decline in the price of electric carbon, in part because of the summer. Industrial carbon supply increased while downstream demand fell slightly. We expect lithium carbonate prices to continue to decline in the third quarter, with the average annual price of battery-grade lithium carbonate at 70,000 yuan per ton.

SMM Cobalt Lithium Research team

Hong Lu 021 51666814

Ning Ziwei 021 51666780

Qin Jingjing 021 51666828

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