Power battery prices face further downside potential in H2

SHANGHAI, Aug 1 (SMM) – Prices of power battery systems risk losing 10-15% in the second half of this year, as the scale back of national subsidies for electric vehicles (EVs) and slow downstream demand drive automakers to focus more on costs in procuring EV batteries, SMM expects. 

The development of ternary batteries with high-nickel content in China continued its slow progress as new EV subsidy policies also highlighted battery safety. 

SMM learned that domestic capacity of lithium iron phosphate (LFP) batteries suitable for passenger vehicles remained limited, compared with that of ternary batteries. This will support prices of LFP batteries in the short term, with prices of ternary batteries already below prices of LFP batteries. 

Prices of refined cobalt, the raw material to produce ternary batteries, extended their declines in July as sellers failed to hike offers amid caution across downstream consumers. Accelerated declines in overseas prices of cobalt reinforced pessimistic outlook. Downstream buyers barely purchased and mostly consumed their inventories, SMM learned as of July 29.

SMM assessed prices of refined cobalt slid from 225,000-238,000 yuan/mt at the start of July, to 216,000-228,000 yuan/mt as of July 31. 

Last month, prices of lithium carbonate also trended downwards as some producers mulled shifting capacity from battery-grade lithium carbonate to industrial-grade materials if margins continue to fall.

While demand for battery-grade lithium carbonate shrank considerably in July, consumption of industrial-grade lithium carbonate was underpinned by growing markets of LFP and lithium manganese oxide (LMO) material.

SMM assessed prices of battery-grade lithium carbonate at 66,000-69,000 yuan/mt as of July 31, down some 6,000 yuan/mt from the start of July, and prices of industrial-grade lithium carbonate at 61,000-64,000 yuan/mt, down about 4,000 yuan/mt on the month.