[SMM Cobalt and Lithium Morning Meeting Summary] Overall Operating Rate of Anode Industry Remains Low with Limited Demand from Downstream Anode Manufacturers

Lithium Ore:

At the beginning of this week, lithium ore prices remained stable WoW. For spodumene, given the persistent sentiment to stand firm on quotes from overseas mines, quotations stayed at high levels. In some domestic regions, spodumene spot supply was temporarily in an undersupply phase, and the current price decline was less significant compared to lithium carbonate.
Regarding lepidolite, due to sustained demand from some enterprises with high operating rates and the lack of significant improvement in supply, lepidolite prices remained at high levels with little WoW change.
In the short term, lithium ore prices are expected to fluctuate rangebound.

Lithium Carbonate:

At the beginning of this week, the transaction price center for lithium carbonate spot shifted downward. Pre-holiday restocking by some material plants was nearing completion, and purchase sentiment slightly weakened. Currently, upstream lithium chemical plants still exhibit strong sentiment to stand firm on quotes, with most transactions occurring between traders and downstream material plants. Considering the weakening signs in both actual supply and demand for lithium carbonate, combined with the current market's circulating inventory levels, lithium carbonate spot prices are expected to have slight downside room, accompanied by sideways movement.

Lithium Hydroxide:

At the beginning of this week, lithium hydroxide prices continued to rise slightly. On the production side, as year-end approaches, some supply-side entities have maintenance plans, leading to a certain reduction in overall supply. On the demand side, although there is some terminal-driven rush for installations, overall demand showed no significant increase. In the market, upstream lithium chemical plants continued quoting at 70,000 yuan/mt and above, with recent reports of maintenance-related reductions further supporting the sentiment to stand firm on quotes. However, downstream ternary cathode material plants and end-users showed limited purchase willingness due to the current high price levels and lack of just-in-time procurement plans. Additionally, with the weakening trend in lithium carbonate prices, the upward momentum for lithium hydroxide prices is expected to remain limited in the short term.

Refined Cobalt:

This week, refined cobalt prices dropped slightly. On the supply side, mainstream refined cobalt smelters maintained stable operating rates, and spot supply was sufficient. On the demand side, overseas demand was sluggish during the Christmas holiday, while domestic demand weakened as year-end approached, following some sporadic restocking earlier. Overall, the market was relatively quiet, with limited inquiries and transactions, putting downward pressure on spot prices. Looking ahead, as restocking demand is essentially over, the short-term supply-demand pattern is likely to remain unchanged, and spot prices are expected to stay weak.

Intermediate Products:

This week, cobalt intermediate product prices remained stable. On the supply side, port inventories were sufficient. On the demand side, cobalt smelters faced high costs, and demand for finished cobalt products was lackluster, resulting in weak raw material restocking willingness. In the market, the raw material segment was relatively calm, with little fluctuation in spot prices. Looking ahead, given the confirmed surplus in the forward market, cobalt intermediate product prices are unlikely to rise.

Cobalt Salts (Cobalt Sulphate and Cobalt Chloride):

This week, cobalt salt prices continued to decline. On the supply side, cobalt salt smelters maintained low operating rates. On the demand side, the market only sustained just-in-time procurement, with overall demand remaining weak and unable to accept high-priced cobalt salts. Transactions during the week were relatively quiet. As year-end approaches, some cobalt salt plants, driven by cash flow considerations, sold at prices below the market level, further depressing spot prices. Next week, with no significant changes expected in the supply-demand pattern, spot prices are likely to remain under pressure, with further downside room.

Cobalt Salts (Co3O4):

This week, Co3O4 prices remained stable. On the supply side, Co3O4 smelters reduced their operating rates. On the demand side, only a few enterprises placed sporadic new orders, and demand in the LCO market was mediocre, primarily driven by just-in-time restocking. Overall, the market exhibited a weak supply-demand dynamic. Next week, some enterprises may lower prices to clear year-end inventories, coupled with the continued decline in raw material cobalt salt prices, weakening cost support for Co3O4. Spot prices are expected to decline slightly.

Nickel Sulphate:

At the beginning of this week, the SMM battery-grade nickel sulphate index price was 26,379 yuan/mt, with the quotation range for battery-grade nickel sulphate between 26,000 and 26,920 yuan/mt, and the average price remained flat WoW. On the demand side, some precursor plants made inquiries in the market this week, but overall market activity was low. Considering the firm pricing stance of nickel salt smelters, most smelters opted to wait and see. On the supply side, nickel salt smelters maintained a strong sentiment to stand firm on quotes, with low inventory levels and relatively scarce nickel salt circulation. In the context of weak demand from both buyers and sellers, nickel sulphate prices are expected to remain stable.

Ternary Cathode Precursors:

At the beginning of this week, ternary cathode precursor prices remained stable compared to last weekend. In terms of raw materials, nickel sulphate, cobalt sulphate, and manganese sulphate prices all remained stable. From the demand perspective, overall demand for ternary cathode materials was strong this month, with increased production schedules at material plants. On the supply side, the production of top-tier ternary cathode precursor enterprises in December saw slight increases. However, unlike previous years with significant year-end production surges, inventory control measures by some top-tier enterprises limited the growth. Looking at January's production schedules, top-tier enterprises are expected to reduce production to varying degrees, mainly due to Chinese New Year shutdowns and logistics issues. Overall, January's precursor production is expected to weaken slightly. In summary, with the nickel salt market in a weak supply-demand pattern, ternary cathode precursor prices are likely to remain stable.

Ternary Cathode Materials:

On Monday, with no changes in sulphate prices, the significant decline in lithium carbonate prices led to varying degrees of cost reductions for 5-series and 6-series ternary cathode materials. Meanwhile, 8-series high-nickel ternary cathode materials maintained synchronous increases due to the stable upward trend in lithium hydroxide prices.
Currently, in December, the operating rates of domestic top-tier ternary cathode material producers remain high, while small and medium-sized ternary material producers have significantly reduced or suspended production. In January, the production schedules of top-tier ternary material enterprises are expected to remain at high levels, driven by battery enterprises' expectations for a rush in power battery installations and exports. Some ternary enterprises anticipate further increases in January orders compared to the current level. However, due to the Chinese New Year break and the continued production cuts by small and medium-sized ternary enterprises, the total production of ternary materials in January is expected to slightly decline compared to December. Demand side, downstream battery manufacturers' demand remained robust at year-end. The expected decline in January production schedules for power battery manufacturers is also relatively small, and market activity remains high. LFP: This week, LFP prices showed little change overall, with a slight increase. Lithium carbonate prices stabilized this week, showing signs of halting their decline. Long-term contracts for next year are primarily signed with no discounts or very low discounts. Processing fees saw little change this week, continuing to follow long-term contract prices, which remain relatively stable. However, material producers have shown strong intentions to raise processing fees for next year, with a clear sentiment to stand firm on quotes. This week, a tender for LFP by a battery manufacturer resulted in a failed bid, as upstream and downstream parties have yet to reach a consensus and are currently in a negotiation phase. Operating rates for top-tier and second-tier LFP enterprises remained high this week, and China's LFP production in December is not expected to see significant reductions. Overall, the LFP market continues to operate on a high-growth trajectory, with no signs of order declines observed this week. Iron Phosphate: Iron phosphate prices continued to rise recently, with sulphuric acid and industrial ammonium prices remaining stable at high levels. Ferrous sulphate prices continued to increase, with delivered prices reaching approximately 450 yuan/mt and showing an upward trend. The production costs of iron phosphate using ammonium and sodium methods continued to rise. Driven by both high costs and robust demand, iron phosphate enterprises exhibited strong sentiment for price increases, raising prices by 300-500 yuan/mt, with transaction prices concentrated around 10,500-11,000 yuan/mt. As this week marks both the month-end and year-end, price negotiations for iron phosphate are still ongoing. LCO: This week, LCO prices remained stable, with the latest prices for 4.2V/4.4V/4.5V LCO at 134,000/138,000/150,000 yuan/mt, unchanged from last week. On the raw material side, prices for battery-grade lithium carbonate and Co3O4 showed no significant changes this week, keeping LCO costs stable with little fluctuation in market prices. Supply side, LCO production in December declined due to slower year-end stockpiling by enterprises, with downstream companies mostly purchasing as needed, leading to weaker demand. LCO prices are expected to show a slight downward trend in the future. Anode: This week, anode prices remained stable. Cost side, downstream anode demand remained high, with low-sulphur petroleum coke refineries performing well in shipments and inventory levels remaining low. Low-sulphur petroleum coke prices stayed high this week. Oil-based green needle coke prices remained stable at low levels, with the overall industry operating rate still low and downstream anode manufacturers' demand limited. With new capacity expected to be released, needle coke producers are likely to adopt a price stabilization strategy in the short term. Graphitisation outsourcing faced challenges in reducing prices due to high electricity costs during the dry season, leading to price increase expectations. However, current demand for outsourced graphitisation remains sluggish, making it difficult to raise quotes, and prices are expected to remain stable in the short term. Demand side, downstream customers are actively stockpiling for installations, supporting anode demand. Downstream buyers are primarily focused on ensuring procurement, resulting in low sentiment for price suppression. Against the backdrop of low anode prices and persistently high raw material costs, anode manufacturers showed strong sentiment for price increases during a tender by a top-tier battery cell enterprise. However, as the procurement price of this enterprise has been below the industry average, the expected price increase is more of a correction for previous low prices, with limited impact on the overall industry procurement price. Artificial graphite anode prices are expected to remain stable in the future. Separator: This week, lithium battery separator prices remained stable. Supply and demand side, domestic downstream end-users are rushing installations at year-end, while overseas customers are stockpiling in advance due to potential unfavorable factors such as tariff penalties and restrictive policies. This has driven high demand for battery cells and key materials like separators, ensuring high production levels and operating rates for separator enterprises. Price side, after previous price wars and customer price suppression, separator prices are now at relatively low levels. Separator enterprises currently have good order volumes, reducing the intensity of market competition, and are primarily selling at stable prices. Downstream customers are also temporarily refraining from price suppression to ensure stable material supply and procurement volumes, keeping separator prices relatively stable. However, considering the existing surplus separator capacity and the reduced frequency of new order negotiations at year-end, separator material prices may continue to decline in the future. Electrolyte: This week, electrolyte prices remained stable. Supply side, with LiPF6 prices stable and the market in a negotiation phase, electrolyte producers mainly purchased LiPF6 as needed. Demand side, battery cell manufacturers' demand for electrolytes remained relatively stable. Cost side, prices for LiPF6, solvents, and additives were temporarily stable. Currently, electrolyte prices are primarily influenced by LiPF6 prices. However, due to price suppression by battery cell manufacturers, electrolyte prices remained stable. The prices for ternary power battery electrolyte were 21,100-29,550 yuan/mt, while LFP battery electrolyte prices were 16,800-25,550 yuan/mt. In the short term, fluctuations in costs are expected to cause electrolyte prices to move within a certain range. Sodium-Ion Battery: This week, as the prices of key materials and battery cells continued to decline, the cost-effectiveness of sodium-ion batteries became increasingly prominent, potentially boosting market acceptance. The commissioning of polyanion cathode material production lines not only marks the expansion of industry capacity but also injects confidence into the market with the early confirmation of 2025 sales orders. By 2025, the sodium-ion battery market size is expected to reach approximately 5 GWh, indicating significant growth potential. Against this backdrop, hard carbon anode materials, known for their low cost and high cost-effectiveness, have garnered attention as a new hot topic in the industry. As the year-end approaches, sodium-ion battery enterprises are actively planning new product development and marketing strategies for the coming year to gain a competitive edge. Recycling: This week, lithium battery recycling scrap prices remained stable overall. Due to year-end market fluctuations, spot lithium carbonate prices experienced sideways movement this week, but scrap prices showed little change. Meanwhile, nickel prices rose slightly due to increased demand, while cobalt prices remained stable. Against the backdrop of material price fluctuations and stable downstream market demand, LFP battery scrap prices were largely unaffected. With some recycling enterprises stockpiling at year-end, battery manufacturers maintained a supportive attitude toward prices, keeping battery scrap prices firm. Prices for ternary battery scrap remained basically stable amid various material price changes. In terms of actual transactions, as the year-end peak for ESS and power battery installations passed, coupled with cautious expectations for the Q1 market next year, recycling enterprises showed generally weak stockpiling intentions, and overall market transactions remained sluggish. Downstream and End-Users: On December 21, LG Energy Solution's US subsidiary announced an agreement with US new energy investor Excelsior Energy Capital to provide 7.5 GWh of ESS, along with integration and full life cycle services. The first batch is scheduled for delivery in April 2026, with all projects meeting US domestic requirements. All projects will adopt LG Energy Solution's latest containerized ESS and LFP batteries, aiming to optimize energy efficiency and enhance safety. LG Energy Solution will provide all system integration services, AEROS™ software control systems, and related services to support the systems and operators throughout the project life cycle. This agreement builds on LG's growth in the US grid-scale battery storage market. Previously, LG signed a four-year battery storage system supply agreement with US company Terra-Gen, under which it will supply up to 8 GWh of modular containerized LFP battery storage systems from 2026 to 2029, with these systems manufactured in North America. 【Zhang Yongwei of China EV100: Solid-State Batteries Expected to Be Installed in Small Batches Within 2-3 Years】 Zhang Yongwei, Vice Chairman and Secretary General of China EV100, stated that domestic semi-solid-state battery technology is currently leading. By 2025, shipments of batteries incorporating solid-state technology (including automotive and non-automotive applications) are expected to exceed 10 GWh. Fully solid-state batteries are currently in the stage of core technology breakthroughs and validation, with small-batch installations expected within 2-3 years. 【Zhang Yongwei of China EV100: NEV Sales Expected to Reach 16.5 Million Units in 2025, with a Growth Rate of Nearly 30%】 Zhang Yongwei, Vice Chairman and Secretary General of China EV100, stated that the overall automotive market next year is expected to progress steadily. By 2025, total sales are projected to reach approximately 32 million units, with the domestic market accounting for around 26 million units, growing at a rate of 3%. Optimistically, NEV sales in 2025 (including exports) are expected to reach approximately 16.5 million units, with a growth rate of nearly 30% and a penetration rate exceeding 50%. Domestic demand is expected to reach 15 million units, with a penetration rate exceeding 55%. 【Institutions: Global BEV Sales Expected to Reach 15.1 Million Units Next Year】 According to experts from S&P Global Mobility, global BEV sales next year are expected to reach 15.1 million units, accounting for 16.7% of global automotive sales. While the final data for 2024 has not yet been released, sales are estimated at approximately 11.6 million units, with a market share of 13.2%.