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Cobalt, lithium markets saw subdued trades post-holiday 

iconOct 12, 2019 14:58
Consumption of ternary batteries may unlikely to improve by the end of Oct

SHANGHAI, Oct 12 (SMM) – Downward pressure is expected on cobalt prices in the first half of October, but bullish factors such as downstream procurement on a monthly and yearly basis are expected to support prices in the second half of the month. SMM sees cobalt prices hovering rangebound with a volatility rate of 15% for the rest of October.

Solid demand from cathode materials will narrow downside room in lithium prices. Near-term prices may consolidate at lows with producers in Qinghai and Jiangxi less willing to destock at lower prices. 

On the downstream data side, about 76,000 new energy vehicles obtained qualification certificates in China in September, according to SMM database. This was up 7% from a month ago but remained 23.2% lower from a year ago. 

Installed power battery capacity also picked up, by 14.8% on the month to stand at 3.9GWh in September, 30.8% lower from the same period last year. 

Market participants told SMM that major battery producers so far have no plan to expand production. While strong demand for lithium iron phosphate (LFP) batteries sustained and caused supply shortage, consumption of ternary batteries may unlikely to improve by the end of October. 

Automakers have mulled lowering annual output targets, by 20,000-50,000 units at each producer, SMM learned, and this is expected to further expand the downward room in NEV production this year. 

In the week ended Friday October 11, domestic prices of refined cobalt held steady as a limited increase in overseas prices during the week-long National Day holiday kept domestic consumers cautious. Accelerated decline in the futures market at the end of the week dampened market confidence and led to fewer trades. 

Producers of cobalt hydroxide withheld from providing offers of spot cargoes and planned for the signing of long-term contracts. 

SMM assessed traded prices of refined cobalt flat at 285,000-295,000 yuan/mt in the week of October 11, with prices of cobalt hydroxide also stabilising at $11-12/lb.

Transactions of cobalt salts were subdued after the holiday as downstream producers already restocked cargoes able to meet production needs till the end of October. Only a few purchases of spot cobalt sulphate occurred with traded prices below the 60,000 yuan/mt level. 

Producers of cobalt chloride, meanwhile, hiked offers above 75,000 yuan/mt, widening its premiums over cobalt sulphate. 

SMM assessed prices of cobalt sulphate unchanged from pre-holiday at 56,000-60,000 yuan/mt, with prices of cobalt chloride standing at 71,000-76,000 yuan/mt, up 1,000 yuan/mt. Prices of battery-grade nickel sulphate climbed 800 yuan/mt on the week to 31,300 – 32,300 yuan/mt.

Continued peak demand season in the digital industry, alongside higher quotes of cobalt chloride, which is used to produce cobalt (II, III) oxide, pushed up prices of cobalt (II, III) oxide by 2,000 yuan/mt on the week to 220,000- 230,000 yuan/mt as of October 11, according to SMM assessments.

Prices of ternary precursor also rose on higher costs of raw materials, but a sluggish power battery market and intense competition in the digital market constrained the growth in ternary precursor prices. 

SMM assessed prices of NCM523 and NCM622 were both 1,000 yuan/mt higher on the week, standing at 101,000-106,000 yuan/mt and 108,000-112,000 yuan/mt, respectively. 

Prices of lithium carbonate were unchanged from the pre-holiday level, but sources told SMM that producers in major production areas of Qinghai and Jiangxi were ready to adjust prices soon after assessing factors including weather condition, cost, and inventory. 

Downstream buyers remained sceptical about higher lithium carbonate prices in the long-term given a lack of pickup in demand from power battery market and large quantities of feedstock stockpiles that need to be depleted. 

SMM assessed prices of battery-grade lithium carbonate stood flat at 59,000-62,000 yuan/mt, with prices of industrial-grade lithium carbonate at 49,500-53,500 yuan/mt.

A quiet post-holiday market weighed on prices of lithium hydroxide. This drove small producers to scale back supply while sales and production at large plants stayed firm. Limited domestic demand is likely to further depress prices of lithium hydroxide, narrowing its price spread with that of battery-grade lithium carbonate. But stabilising prices of lithium carbonate may keep the process slow. 

SMM assessments showed that prices of battery-grade lithium hydroxide (coarse particle) lost an average 500 yuan/mt on the week to 64,000-68,000 yuan/mt. 

Prices of lithium cobalt oxide (LCO), which is used to produce 4.35V batteries, rose an average 5,000 yuan/mt week on week to 235,000-245,000 yuan/mt, buoyed by brisk orders from downstream battery plants. 

Prices of ternary materials edged higher on the week, but dissatisfying data around installed power battery capacity grew market concerns about demand. Some producers of ternary materials that were used to make power batteries shifted their capacity to digital-device-use ternary materials, and this intensified competition in the digital market. 

SMM assessed that trades of NCM523 were at 147,000-155,000 yuan/mt, and deals of NCM622 at 165,000-172,000 yuan/mt, both up 1,000 yuan/mt on the week.

Prices of LFP material fell as expected despite higher raw material costs and strong demand. 

LFP producers sought to lower costs by adopting cheaper industrial-grade lithium carbonate as feedstock, in a bid to preserve current consumers. Bargaining power of those producers weakened as the battery market became more concentrated to large producers. 

SMM assessments indicated that prices of LFP used in power batteries lost 2,000 yuan/mt on the week and came in at 44,000-47,000 yuan/mt. 

Oversupply and declines in feedstock costs drove down prices of lithium manganese oxide (LMO), even as demand kept relatively stable. 

SMM assessed prices of LMO used in high-energy-density lithium-ion batteries were 2,000 yuan/mt lower at 26,000-32,000 yuan/mt, and prices of LMO used in motive batteries 1,000 yuan/mt lower at 43,000-45,000 yuan/mt. 

Market commentary

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

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