SMM, July 25, 2010:

Battery Terminal Market:

Continuing the wave of power battery production cuts that began in late June, the power battery industry started at a lower-than-expected rate in July. In addition to some leading power battery enterprises because the industrial chain is more complete, the recent start-up rate shows signs of recovery, the rest are mainly de-inventory, industry differentiation is obvious. Downstream new energy vehicle demand has not yet recovered in the third quarter, the development of the industry may still need policy support. Given the further retreat of subsidies next year, battery companies have begun a strategic layout for the "unsubsidised era". Although the industry emphasizes the cost advantage of lithium iron phosphate in the power market, the improvement of safety and performance in the future is the focus of consumers, and ternary battery is still the mainstream battery in the new energy automobile industry in the future.

Upstream raw material price:

Cobalt: suppliers are in a strong mood to raise prices, and the willingness to pick up downstream is mediocre. This week cobalt quotations remain high, but downstream performance is cold, the main consumption of pre-inventory. Cobalt salt, traders intend to be positive, producers cherish the selling mood is heavy, raise the quotation, although there is an increase in downstream inquiries, but no large quantities of transactions, sporadic orders trading prices up.

Lithium: lithium carbonate: downstream demand for battery-grade lithium carbonate has not improved, trading is sporadic. Positive material manufacturers for the price of psychological expectations continue to decline, causing some pressure on the upstream quotation. At present, due to the considerable growth rate of the downstream terminal consumer market of lithium iron phosphate and lithium manganate, the output is relatively stable, and there is a certain support for the demand for industrial grade lithium carbonate. At the same time, some manufacturers said that the current lithium salt price is in the downward range, taking into account the profit margin, there are plans to shift the battery-grade lithium carbonate production line to the production of industrial-grade lithium carbonate. Lithium hydroxide: battery grade lithium hydroxide downstream demand is not good, the quotation is scarce, upstream manufacturers have appeared as soon as possible to return funds to the low price throwing behavior.

SMM Cobalt Lithium Research team

Hong Lu 021 51666814

Ning Ziwei 021 51666780

Qin Jingjing 021 51666828

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