[SMM Weekly Review of Power Battery Cell Market] Intensive Launch of New Car Models Drives Up Demand

On February 9, China’s National Development and Reform Commission (NDRC) and National Energy Agency (NEA) jointly published the Notice on Deepening Market-Based Reform of Renewable Energy On-Grid Tariffs to Promote High-Quality Renewable Energy Development.

From the perspective of battery installations, in April, China's power battery installations declined MoM, as did LFP battery installations. The market share of ternary batteries continued to shrink. Top-tier enterprises maintained their leading positions, while second- and third-tier enterprises sought breakthroughs. The industry chain is undergoing profound adjustments.

Today, driven by favorable policy developments, the main lithium carbonate futures contract fluctuated upward overall after the opening bell, surging over 3% at one point during the daytime session. By the close of the daytime session, the main lithium carbonate futures contract closed up 3% at 65,200 yuan/mt, up 2,640 yuan/mt from the low of 62,560 yuan/mt set during the session on May 12, representing a 4.22% increase. Regarding the reasons for the rise in lithium carbonate futures prices, SMM believes it is mainly related to favorable policy news. On May 12, the website of the Ministry of Commerce released a joint statement on the China-US Geneva Economic and Trade Talks, stating that the US's 24% reciprocal tariff imposed on Chinese products would be suspended for the initial 90-day period. According to the latest news today, this tariff adjustment has been temporarily implemented. SMM understands that, overall, as the reciprocal tariff adjustment includes exemptions for new energy vehicles (NEVs) and their parts, the change in reciprocal tariffs will have a greater impact on the export of energy storage system (ESS) batteries. This may drive an anticipated surge in exports of Chinese ESS battery cells, thereby boosting the demand for lithium carbonate.

Lion Rock Resources recently announced that in the surface sampling program conducted at its Volney project in South Dakota, the assay results of lithium ore indicated that the lithium content in the ore pile samples reached up to 5.3% Li₂O, while the lithium content in the pegmatite outcrop samples reached 3.7% lithium oxide (Li₂O). These discoveries have extended the lithium-mineralized pegmatite trend to an area of 1,000 meters by 500 meters. The Volney project, located in the Black Hills mining district, 20 kilometers southwest of Spearfish, is a previously producing polymetallic project renowned for its high-grade gold, lithium, and tin ores.