[2019.10.21 minutes of Internal Morning meeting of Cobalt and Lithium New Energy] Cobalt Chloride prices maintain strong Lithium Salt prices or encounter New pressure

SMM, 21 Oct:

Battery end Market:

For the fourth quarter of the expectations of new energy vehicles, we believe that due to the same period last year, the industry believes that the time of subsidy retreating will be ahead of schedule, the end of the year's "rush" will be strong, the tail-warping effect is obvious. However, this year, a large number of new energy vehicle demand has been overdrawn in advance before the end of the subsidy transition period in the middle of the year, superimposed on the "national five" to "national six" policy has a substitution effect on new energy vehicles, resulting in no significant improvement in the new energy vehicle market since the second half of the year. According to the current annual plan of the mainframe plant for each model, production expectations have been reduced by different ranges, and given that the mainframe factory will still seize the opportunity of subsidies this year, we still maintain the previous forecast of 1.4 million production for the whole of 2019.

News: on October 18, Beijing time, the first overseas factory in the German state of Thuringia officially broke ground. According to the plan, Ningde Times European plant opened an area of 23 hectares, the production line includes cell and module products, is expected to achieve 14GWh battery capacity in 2022.

Upstream raw material prices:

Cobalt: the price of electric cobalt in China is the same. 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. The price of cobalt sulfate is slightly loose, the quotation of large factories is strong, small and medium-sized manufacturers are 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.

Lithium: lithium suppliers currently 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 lake, affected by the decline in market demand from Japan and South Korea, lithium carbonate imports from Chile and South Korea have increased significantly since the second quarter. If the import 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 to ship the goods at a low price, it will put further pressure on the domestic lithium carbonate price in the fourth quarter, or there will be a new bottom range of prices.

SMM Cobalt Lithium Research team

Hong Lu 021-51666814

Qin Jingjing 021-51666828

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