SHANGHAI, Oct 8 (SMM) - Some producers in the new energy industry chain are still affected by power rationing after the National Day holiday.
Cobalt: The domestic market was quiet during the National Day holiday, while overseas cobalt prices rose. It is expected that the quotations of cobalt salt, refined cobalt, and tricobalt tetraoxide will increase after the holiday due to increasing raw material costs at domestic smelting enterprises. However, as the production of downstream cathode material companies was severely hit by the energy consumption dual control policy, it is necessary to closely monitor the resumption of production and raw material purchases of downstream producers.
Lithium: A small number of lithium salt companies were affected by power rationing before the holiday, which affected the total production by about 7%. Enterprises have basically returned to normal operation after the holiday. Domestic smelters continued to raise their offers of lithium carbonate, but downstream production cuts slowed down the price increase. The transaction prices are expected to rise further as downstream purchasing sentiment has not diminished. The expansion of LFP producers has been delayed significantly in H2, resulting in lower-than-expected growth in demand for raw materials. However, lithium salt supply will remain in a shortfall as the rationing of natural gas and power will affect the upstream production in Q4.
The impact of power rationing: Hunan, Guangdong and Jiangsu imposed stricter power rationing policies on local companies before the holiday, causing the average monthly production of local precursor and cathode material producers to fall by over 10%. Many large ternary cathode material and lithium iron phosphate factories were also affected. Some lithium battery makers in Shandong and Guizhou have received notices of power rationing, but there is no stipulation as to when the power rationing shall be implemented. However, with the tightening of the "dual control of energy consumption" in many regions, power rationing is likely to escalate, which will reduce output further.
Precursor: With stable prices of cobalt salt and slight decline in the prices of nickel salt, the costs of precursor were little changed. The output of precursor producers in Hunan and Guangdong is expected to drop slightly this month due to tightening power rationing. The power rationing curbed downstream purchases before the holiday, leaving prices largely flat.
Lithium cobalt oxide: The rising prices of tricobalt tetraoxide and battery-grade lithium carbonate encouraged lithium cobalt oxide suppliers to raise their quotations as well. Some suppliers hiked offers of 4.4V lithium cobalt oxide to 350,000 yuan/mt. Orders from mobile phone battery cell makers recovered slightly, pushing up the prices of lithium cobalt oxide.
Ternary cathode materials: The capacity at many ternary cathode material plants in Hunan was affected by the power rationing, with the capacity of the major local producers being reduced by more than 50%. The spot market was quiet. The prices under long-term orders climbed along with raw material prices.
Lithium iron phosphate (LFP): The rising prices of lithium carbonate and iron phosphate increased the costs of LFP plants, encouraging them to hike offers accordingly. The mainstream quotations have exceeded 70,000 yuan/mt, and some producers even hiked their quotations to above 75,000 yuan/mt. The price outlook remains bullish amid strong demand.
Lithium manganese oxide (LMO): Many LMO makers reported significant declines in orders as rising LMO prices curbed purchases from e-bike and 3C sectors. The prices of raw materials, such as lithium carbonate, have continued to rise recently. Most LMO producers have low level of raw material inventory, and some have difficulty in securing raw material supply, which limits their production. The prices of LMO are expected to continue to rise along with raw material prices.
