[2020.05.05 Cobalt Lithium New Energy Market Holiday Review] overseas market demand is still weak after the festival cobalt lithium prices may show signs of slight decline

6 May:

Battery end Market:

Affected by the epidemic, people's travel is limited and consumer demand shrinks. According to statistics, by the beginning of April, more than 150 car factories worldwide had stopped production, while more than 3,000 parts and components enterprises had ceased production. The market demand for new energy vehicles has also been greatly impacked. from the point of view of domestic orders, the domestic market was greatly affected in the first quarter, and the impact of overseas market demand in the second quarter will gradually spread to the domestic raw material market. This is reflected in the small reduction in domestic ternary material export orders in May.

Upstream raw material prices:

Cobalt: after the festival, South Africa downgraded the alarm level to level 4, allowing freight railways to be fully restored nationwide, shipping allowing goods to be transported from seaports to warehouses or final destinations in accordance with existing rules, and allowing goods to cross the South African land border. Some of the downstream factories due to new orders or increase a little cobalt raw material demand, but the market as a whole still takes a cautious attitude, basically according to the order demand for procurement. SMM predicts that there will still be a small downward pressure on cobalt market prices after the festival, but there is little room for it.

Lithium: during the May Day holiday market transactions are deserted, the terminal is in the inventory stage, the material end on-demand purchase of lithium carbonate, no more willingness to stock. The operating rate of overseas mines remained low in the first quarter, inventory pressure transferred to the lithium salt end, some manufacturers had to increase production costs to reduce production costs, "to make up the price"; salt lake and mica lithium is also facing the problem of weak demand and excessive supply, we believe that the price of lithium carbonate after the festival may continue to bear pressure. Lithium hydroxide, affected by the overseas epidemic before the festival, domestic high nickel plants cut orders, market demand sporadic, suppliers choose to wait and see after the market changes, the price is stable. However, with the weakening of lithium carbonate prices in the second quarter, lithium hydroxide prices may show signs of falling after the festival.

Cathode materials and precursors: ternary precursor pre-node price pressure, some manufacturers to sell at a low price, trading volume is not large. Some Sanyuan material plants still have to wait for the battery plant to schedule production in May and plan to start purchasing after the festival. As the material factory is more pessimistic about future expectations, procurement volume is not as good as March and April, it is expected that the price of ternary precursor after the festival may be slightly revised back. Some of the ternary material small and medium-sized factories are subject to the battery factory before the festival, 110000 of the power type and less than 100000 of the digital type are traded at the price of less than 100000, while the other large factory directors are single, but the downstream orders are reduced, which is not optimistic about the price in the later stage. Affected by the overseas export of downstream consumer batteries and consumer goods, lithium manganate orders decline month by month, downstream continues to depress prices, lithium manganate prices have hit bottom, it is difficult to reduce prices.

News:

1. [Yibin Tianyi reduced AVZ subscription to avoid FIRB approval] on May 4, AVZ Mining (AVZ Minerals Limited) announced that Yibin Tianyi finally successfully subscribed for 9 per cent of AVZ shares (a total of 237500000 shares) at a share price of 4.50 cents, totaling A $10687500. The previous investment company, Gatumbeixiang (Canaccord Genuity Australia Limited), executed a securities underwriting agreement and exercised a A $5.3 million listing option due to expire on May 24. AVZ is still negotiating a final binding underwriting contract with Yibin Tianyi.

2. [Shenzhen Development and Reform Commission: relaxing the Application conditions for incremental Index of individual New Energy vehicles] on April 30, the Shenzhen Municipal Development and Reform Commission drafted a number of measures to deal with the impact of the epidemic situation of Xinguan pneumonia and promote the promotion and application of new energy vehicles in Shenzhen (draft for soliciting opinions). Among them, it is mentioned that the application conditions for the incremental index of individual new energy cars should be relaxed: the conditions for overseas Chinese and residents of Hong Kong, Macao and Taiwan to live in this city for more than nine months a year and foreigners for two consecutive years and to live in the city for more than nine months a year for a total of more than 24 months have been abolished for non-deep household registrants for more than 24 months in a row (excluding supplementary payments). The conditions for living in this city for more than nine months a year. The move is intended to boost demand in the new energy vehicle market and is good news for the local new energy vehicle market.

3. [the two major cobalt giants in the Democratic Republic of the Congo reduced production significantly in the first quarter, and cobalt sales in Luoyang Molybdenum Industry were close to Glencore] according to the first quarter 2020 reports released by Luoyang Molybdenum Industry on April 29 and Glencore on April 30, respectively, the cobalt production of the two giants was 3244 tons and 6100 tons, down 32 percent and 44 percent respectively from the same period last year. But Luoyang molybdenum sold 5344 tons of cobalt in the first quarter, up 50 per cent from a year earlier, approaching Glencore. The decline in Glencore production is mainly due to the suspension of production in the main mines of the Democratic Republic of the Congo (DRC), so copper production is also down 9% from the same period last year. On the other hand, Luoyang molybdenum industry has adopted the strategy of high copper and low cobalt, and copper production has increased slightly by 5% compared with the same period last year.

SMM Battery Materials Research team

Hu Yan 021-51666809

Qin Jingjing 021-51666828

Mei Wangqin 021-51666759

Huo Yuan 021-51666898

Wuyang 021-51666818