SMM, 18 October:

In terms of power batteries, information on power battery production was released this week. According to the China Automotive Power Battery Industry Innovation Alliance, in September 2019, China's power battery production totaled 7.6 GWH, up 9.7 percent from a year earlier and 14.7 percent from the previous month. Among them, the output of ternary batteries accounted for 61.7% of the total output, up 15.1% from the same period last year, and 3.4% from the previous year, while the output of lithium iron phosphate batteries accounted for 37.5% of the total output, an increase of 2.5% over the same period last year, and an increase of 38.3% over the same period last year. From January to September, the total output of power batteries in China was 63.5GWhH, an increase of 37.9% over the same period last year. Among them, the output of ternary batteries totaled 41.0 GWH, accounting for 64.6% of the total output, an increase of 64.7% over the same period last year, while the output of lithium iron phosphate batteries totaled 20.2 GWha, accounting for 31.9% of the total output, down 1.0% from the same period last year. According to SMM, at present, the lithium iron phosphate battery in the two leading battery factories of C and B is close to full production, the operating rate of the ternary battery in the C family is maintained at about 70%, while the operating rate of the ternary battery in the B family is relatively low. In addition, the second echelon power battery enterprises ternary battery production line affected by the cost, the operating rate has declined slightly in October. Lithium iron phosphate batteries are expected to remain strong in the fourth quarter.

Electrolytic cobalt and cobalt hydroxide: the price of domestic cobalt is flat this week. Northern big factory quotation is strong, downstream before the festival has been fully stocked, coupled with the poor performance of foreign media, class futures market is also insufficient confidence, continued to decline, electric cobalt spot transactions sparse. In the aspect of cobalt hydroxide, the supplier's willingness to quote in bulk is not good, and some domestic buyers look at the price difference of smelting products with the intention of arbitrage and send out inquiries but seldom reply. The price of SMM electrolytic cobalt is 28.5-295000 yuan / ton, the average price is the same as last week. The price of cobalt hydroxide in SMM is $11-12 per pound, the average price is the same as last week.

Cobalt salt and nickel salt: the price of cobalt sulfate is slightly loose this week, the big factory quotation is firm, the small and medium-sized manufacturer is worried about the future, a small amount of price reduction shipment, in order to drop the bag for safety. Cobalt chloride prices in the digital market demand is still strong, cobalt sulfate water. Although the production capacity of the large plant can be converted, but in view of the conversion time, and the corresponding demand side is too concentrated and strong, the bargaining process may not be able to continue to obtain excess water revenue, so there is no conversion plan for the time being. The price of cobalt sulfate in SMM is 56, 000 yuan / ton, the average price is the same as last week. The current price of SMM cobalt chloride is 7.1-76000 yuan / ton, the average price is the same as last week. The price of nickel sulfate in SMM battery grade is 30000-31000 yuan / ton, up 1300 yuan / ton from last week.

Cobalt tetroxide: the market of cobalt tetrachloride is relatively stable. Downstream is still in peak demand season, big factory quotations are flat compared with last week. The current price of SMM cobalt oxide is 22-230000 yuan / ton, the average price is the same as last week.

Ternary precursor: the trading price of the body before the yuan is flat on Wednesday, and the order delivery is the main market in the middle of the month, and the signing of the bill is not active. Some producers said they had received some pressure from downstream material factories due to a pullback in nickel and cobalt prices. The price of SMM ternary precursor (type 523) is 10.1-106000 yuan / ton, the average price is the same as last week. The price of SMM ternary precursor (622) is 10.8-112000 yuan / ton, the average price is the same as last week.

Lithium carbonate: lithium carbonate prices have fallen slightly this week. Industry insiders told SMM that the current price of lithium carbonate is close to the production cost line of domestic smelters, while suppliers can only give priority to price reduction under the pressure of high inventory and cash flow. In the case of limited demand and supply can not actively reduce the suspension of production, the market can only be cleared passively. After Alita announced its own takeover restructuring due to loan problems, Altura, another lithium concentrate producer, also raised additional capital because of a shortage of funds. Overseas salt lakes have also moved frequently since the second half of the year. Domestic lithium carbonate imports have been abnormal since May 2019, with a rapid growth rate. According to SMM, lithium carbonate imports from Chile and South Korea have increased. South Korean import growth We speculate that the orders of foreign companies in South Korea have been broken and re-sold to China. On the other hand, lithium carbonate imported from Chile has not been completely removed by downstream consumption and dealers of cathode materials, and some of them still exist in third-party warehouses in the form of inventory. After entering the fourth quarter, the output of domestic salt lake enterprises may decline slightly due to the impact of the season. At the same time, some enterprises have indicated that they will raise prices by the end of the month. However, we believe that if the import volume of lithium carbonate increases further, and the cost of lithium carbonate in salt lake has a significant advantage over the domestic ore lithium carbonate, if the imported lithium carbonate takes advantage of the cost advantage and uses the low price strategy to ship, it will put further pressure on the domestic lithium carbonate price in the fourth quarter. Or there will be a new bottom range. This week, the price of lithium carbonate in SMM battery grade is 5.8-61000 yuan / ton, down 1000 yuan / ton compared with last week. This week, the price of SMM industrial grade zero lithium carbonate is 4.8-53000 yuan / ton, down 1000 yuan / ton compared with last week.

Lithium hydroxide: demand for lithium hydroxide has not improved significantly this week and spot trading is scarce. Large factory customer group is stable, the production line is close to full production. Some small and medium-sized enterprises have reduced production due to weak demand and rapid decline in prices. This week SMM battery grade lithium hydroxide (coarse particles) price is 6.1-66000 yuan / ton, the average price is 2500 yuan / ton lower than last week.

Lithium cobalt: the price of lithium cobalt continues to rise, and some small and medium-sized lithium cobalt battery plants continued to make up sporadic orders this week, allowing manufacturers to land high quotations. The price of lithium cobalt sulfate in SMM4.35V is 24.2-252000 yuan / ton, up 7000 yuan / ton from last week.

Ternary materials: this week, the ternary materials market maintained last week's state, the power market is still quiet, the digital market price competition is fierce, trading prices are difficult to improve. The price of SMM ternary material (type 523) is 14.7-155000 yuan / ton, the average price is the same as last week. The price of SMM ternary material (model 622) is 16.5-172000 yuan / ton, the average price is the same as last week.

Lithium iron phosphate: the price of lithium iron phosphate has fallen this week. At present, the pricing mode of lithium iron phosphate material factory is in a translucent state, and the price control of downstream battery enterprises is strong. Although the demand for lithium iron phosphate materials has been strong since the fourth quarter, with the continuous decline in the price of lithium carbonate upstream and the decline in production costs after the recovery of the operating rate of various enterprises, the price of lithium iron phosphate has declined slightly. This week SMM lithium iron phosphate (power) price is 4.3-46000 yuan / ton, the average price is 1000 yuan / ton lower than last week.

Lithium manganate: the price of lithium manganate is flat this week compared with last week. The market demand and supply of lithium manganate are relatively stable, and the price change is mainly affected by the change of upstream raw materials. This week SMM lithium manganate (volume) price is 2.6-32000 yuan / ton, the average price is unchanged from last week. This week, the price of SMM lithium manganate (power type) is 4.3-45000 yuan / ton, the average price is unchanged from last week.

Future forecast:

SMM maintained its previous view that short-term cobalt prices showed a volatile trend. At present, the cobalt sulfate market is weak, the cobalt chloride market is still strong, and the two products cannot deviate from each other for a long time. Given that cobalt fundamentals are still in excess of demand, even if the surplus is narrowed and more concentrated, it is still a strong buyer market. It is strongly suggested that the downstream settlement should adopt the SMM cobalt salt price difference linkage mechanism to avoid the procurement risk caused by the deviation of sulfate price trend. Lithium, overseas salt lake lithium carbonate is currently actively looking for sales opportunities in China, lithium prices are expected to improve this year.

SMM Cobalt Lithium Research team

Hong Lu 021-51666814

Qin Jingjing 021-51666828