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Cobalt prices continue rally despite poor trades, lithium salt prices fall further

iconSep 30, 2019 08:00
Stable demand from battery anode will cap the decline in lithium salt prices

SHANGHAI, Sep 30 (SMM) – Prices of cobalt-related products continued their upward trend in the week to September 27. Discounts of cobalt sulphate against cobalt chloride widened, and the trend may continue after the holiday.

Prices of cobalt intermediate products will inch up further as high margins at smelters drove intermediate product suppliers to firm up offers. 

Stable demand from battery anode will cap the decline in lithium salt prices. Shipments at lithium salt producers will be monitored in the short term, while the depletion of inventories and demand growth will determine long-term prices of lithium products. 

China will continue to drive the development of new energy vehicles (NEVs) as a national strategy and accelerate developing intelligent automobiles, said Industry and Information Technology (MIIT) Minister Miao Wei at a recent briefing. 

Official data showed that China produced some 799,000 NEVs during the first eight months of 2019, reaching 53% of MIIT’s previous estimates of 1.5 million units for 2019. The completion rate compared with 47.8% of the same period last year. However, current weak consumption will see domestic NEV makers struggling to meet the annual production targets, despite expectations of installation rush at the year-end. 

SMM lowered its estimates of NEV production this year to 1.4 million units, without any new supportive policy or other stimuli on demand. 

Last week, domestic prices of refined cobalt further trended highers as some downstream consumers restocked in small volume on bullish outlook. However, limited growth in downstream alloy demand and macroeconomic uncertainty will constrain any upward momentum in prices in the weeks ahead. 

Producers of cobalt hydroxide held their offers firm at 30-32% discounts for futures delivery, with spot offers at ports standing at $12.5/lb. High profits at smelters prompted intermediate product suppliers to keep offers at high. 

SMM assessed traded prices of refined cobalt climbed 5,000 yuan/mt from a week ago, to stand at 285,000-295,000 yuan/mt in the week of September 27. Prices of cobalt hydroxide rose $0.5/lb on the week to $11-12/lb.

Producers of cobalt, nickel salts also raised quotes further. Major cobalt sulphate makers offered as high as 63,000 yuan/mt, but actual trades were few and made only by smaller precursor producers, given continued weak demand from power batteries. 

Tight spot supply of cobalt chloride drove up its offers to 75,000 yuan/mt as of Friday, and widened its premiums over cobalt sulphate. 

SMM assessed prices of cobalt sulphate at 56,000-60,000 yuan/mt in the week of September 27, up 1,000 yuan/mt on the week, with prices of cobalt chloride standing at 70,000-75,000 yuan/mt, up 3,000 yuan/mt. Prices of battery-grade nickel sulphate climbed 750 yuan/mt on the week to 30,500-31,500 yuan/mt.

Peak demand season in the digital industry triggered downstream restocking of cobalt (II, III) oxide, a raw material to produce batteries for digital devices. This, combined with higher offers of cobalt chloride, which is used to produce cobalt (II, III) oxide, sent prices of cobalt (II, III) oxide up by 8,000 yuan/mt on the week to 218,000- 228,000 yuan/mt as of September 27, according to SMM assessments. 

Prices of ternary precursor also rose on higher costs of raw materials, but a sluggish power battery market and market talk of fewer orders from power battery producers after the National Day holiday slowed the growth in ternary precursor prices. 

SMM assessed prices of NCM523 rose 1,000 yuan/mt on the week to 100,000-105,000 yuan/mt, with NCM622 increasing 1,000 yuan/mt to 107,000-111,000 yuan/mt.

Prices of lithium carbonate again moved lower as cash-in inclination drove cargo holders to destock amid a limited pick-up in demand from the power battery sector and sufficient supply of ore and smelting raw materials. Growing demand for lower costs across downstream producers also forced lithium salts mills to surrender profits. 

The decline in prices, however, was at slow paces given current low inventories of lithium salts at downstream plants. SMM learned that previous sharp declines in lithium carbonate have pushed producers of mica to the verge of losses. 

Market participants told SMM that price spread widened among industrial-grade lithium carbonate with different grades, with prices of products containing less than 99% lithium carbonate fell to as low as 40,000 yuan/mt. The market remains bearish about post-holiday prices. 

SMM assessed prices of battery-grade lithium carbonate lost an average 1,250 yuan/mt on the week to 59,000-62,000 yuan/mt, while prices of industrial-grade lithium carbonate dropped 500 yuan/mt, to stand at 49,500-53,500 yuan/mt. 

Subdued trades and growing supplies continued to weigh prices of battery-grade lithium hydroxide (coarse particle), by 1,250 yuan/mt on the week to 65,000-68,000 yuan/mt, SMM assessed. Producers reaching full operation this month boosted supplies. Some suppliers were sidelined and did not provide offers in a quiet market. 

Prices of LCO, which is used to produce 4.35V batteries, rose an average 10,000 yuan/mt week on week to 230,000-240,000 yuan/mt, supported by steady consumption from the 5G sector. Offers as high as 250,000 yuan/mt were heard in the market, which touched the key psychological price level of digital battery producers. 

Limited acceptance of higher prices by downstream consumers kept prices of ternary materials from rising in the week to September 27. The market took a pessimistic outlook on the recovery of ternary materials consumption in the fourth quarter.  

SMM assessed that trades of NCM523 were at 146,000-154,000 yuan/mt, and deals of NCM622 at 164,000-171,000 yuan/mt, both flat on the week. 

Prices of lithium iron phosphate (LFP) material, used to produce power batteries, also held unchanged at 46,000-49,000 yuan/mt last week. 

Bargaining power of makers of battery material LFP weakened as the battery market became more concentrated to large producers. This prevented LFP prices from continuously rising even as prices of raw material phosphoric acid grew and demand for LFP built up. There is even downward pressure on LFP prices post-holiday as producers will seek to use cheaper industrial-grade lithium carbonate as feedstock. 

Stable supply and demand kept prices of lithium manganese oxide (LMO) flat last week. SMM assessed prices of LMO used in high-energy-density lithium-ion batteries at 28,500-33,500 yuan/mt and prices of LMO used in motive batteries at 44,000-46,000 yuan/mt. 


Market commentary

For queries, please contact Michael Jiang at michaeljiang@smm.cn

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