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LCO Price Review and Forecast after CNY Holiday

iconJan 29, 2023 10:07
Source:SMM
The decline in raw material prices, coupled with the feeble terminal demand, will weigh on the LCO prices.

SHANGHAI, Jan 29 (SMM) -

Raw materials of lithium cobalt oxide (LCO)

Lithium carbonate: In December, as the rush to install batteries ended ahead of schedule, the demand fell lower than expected and a large number of traders scrambled to destock in order to gain cash before the Chinese New Year (CNY) holiday. As a result, the transaction prices of lithium carbonate dropped constantly, but lithium salt plants held their prices firm. It is expected that the demand for lithium carbonate will rise after the cathode material manufacturers resumed the operation after the holiday, and the prices of lithium carbonate will remain stable or drop slightly amid market recovery.

Co3O4: The demand for Co3O4 from the electronics sector continued to decline in December 2022. In addition, the production was disrupted by a fresh wave of covid-19 at the end of the year. Therefore, the transactions of Co3O4 were rather muted, and Co3O4 prices remained in a consistent downward trend in December. Since the cobalt-based raw material supply is in surplus, the Co3O4 prices are expected to decrease slightly along with the prices of cobalt chloride. At the same time, the high cost of LCO could be hardly passed to downstream buyers. It is thus expected that the downward space for Co3O4 prices will be limited since the prices already neared the production cost.

Supply and demand of LCO

LCO cathode material companies generally arranged production according to orders. In December, battery cell producers reduced the production due to weak terminal demand, which was compounded by the resurging covid-19 infections. As a result, the supply of LCO cathode materials contracted. After the CNY holiday, the LCO battery cell companies were reluctant to produce as they were pessimistic about the demand for LCO from the electronics market. Therefore, it is expected that the supply and demand of LCO will both slip significantly in January compared with the previous month.

LCO price review and forecast

In December, the LCO prices fell sharply following the fluctuation of lithium carbonate prices. As for price forecast, with regards to the raw material prices, the lithium carbonate prices are anticipated to be flat or dip slightly while Co3O4 prices are estimated to see a limited decline. The decline in raw material prices, coupled with the feeble terminal demand, will weigh on the LCO prices.

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