[SMM Cobalt & Lithium Morning Meeting Summary] Tug-of-war between sellers and buyers in separator market, prices unlikely to change in short term

Lithium Ore:

At the beginning of this week, lithium ore prices continued to fall WoW. On the supply side, mines remained reluctant to budge on prices. Faced with ore prices hovering near the cost line recently, their willingness to sell was limited, and there was a certain wait-and-see sentiment. For buyers, the continuously declining lithium carbonate prices have led to a continuous reduction in the ore prices they can accept, with prices as low as between US$600-650/mt. Coupled with high inventory levels at ports, miners faced certain selling pressure, leading to occasional transactions at around US$620/mt. Given the current situation, driven by the decline in lithium carbonate prices, lithium ore prices are expected to decrease somewhat in the short term.

Lithium Carbonate:

At the beginning of this week, the center of spot lithium carbonate transaction prices continued to move lower. On the demand side, subsequent incremental demand is limited, with overall stability prevailing. Moreover, given the high proportion of customer-supplied and long-term agreement materials, downstream material plants' purchase willingness was relatively weak. From the supply side, amidst the hedging opportunities presented by the slight rebound in the futures market, some non-integrated lithium chemical plants showed signs of resuming production or increasing output. The continuous decline in lithium ore prices also weakened cost support, leaving lithium carbonate prices lacking upward momentum. Against the backdrop of an unchanged oversupply situation in supply and demand, the lithium carbonate market will continue to operate under pressure in the short term.

Lithium Hydroxide:

At the beginning of this week, lithium hydroxide prices continued to fall. In terms of market sentiment, most downstream buyers primarily rely on long-term agreements and customer-supplied materials for lithium hydroxide purchases, with few spot orders. On the supply side, most enterprises' production rhythms have remained relatively stable recently. The combination of pessimistic expectations for the future market and high inventory levels has led to a certain loosening in their stance of refusing to budge on prices in the face of downstream price pressure, with transaction discounts slightly lower than before. Coupled with the continuous decline in lithium carbonate prices, lithium hydroxide prices are under pressure to fall.

Refined Cobalt:

Recently, refined cobalt prices have declined. From the supply side, smelters have continued to cut production and are still in the process of destocking. In terms of quotations, traders' quotations have slightly decreased following the futures market. On the demand side, although downstream buyers still maintain a purchasing rhythm as needed, the overall sentiment for accepting goods has improved somewhat, with inquiries and buying slightly increasing. It is expected that this week, with the end of position rolling, the refined cobalt futures market may continue to fluctuate.

Intermediate Products:

Recently, cobalt intermediate product prices have remained stable. The available goods in the market are still mainly from traders, with quotations remaining flat. On the demand side, amidst the decline in cobalt product prices, cobalt intermediate product prices have remained stable. Currently, quotations are slightly higher than the psychological transaction prices expected by downstream manufacturers. Downstream manufacturers' acceptance of goods is poor, and they are still dominated by a wait-and-see sentiment. It is expected that this week, cobalt intermediate products may slightly weaken.

Cobalt Salts (Cobalt Sulphate and Cobalt Chloride):

This week, spot cobalt sulphate prices have continued to decline. From the supply side, spot quotations for cobalt sulphate from both smelters and recycling plants have declined, with some low-priced spot transactions occurring, but there is still no volume-driven purchasing. On the demand side, downstream manufacturers' overall purchasing sentiment is poor, with weak overall stockpiling demand. Additionally, Co3O4 manufacturers have built up some inventory in the early stage, leading to a slight slowdown in Co3O4 sales in the short term and a further decline in manufacturers' purchase willingness. It is expected that this week, spot cobalt sulphate prices may continue to weaken.

At the beginning of this week, cobalt chloride prices slightly decreased. From the supply side, prices from major smelters have remained firm, with almost no cases of low-priced selling. However, some smelters have shown a slight divergence in sentiment, with a stronger willingness to sell, leading to a small number of low-priced transactions and thus pulling down spot market prices. On the demand side, downstream enterprises are mostly in a wait-and-see attitude, primarily making just-in-time procurements, with market sentiment still sluggish. However, due to the ongoing shortage of raw materials, market bullish sentiment remains high. It is expected that cobalt chloride spot prices will continue to fluctuate at high levels.

Cobalt Salts (Co3O4):

At the beginning of this week, Co3O4 prices experienced a slight decline. From the supply side, although smelters' quotations have remained relatively stable, their willingness to sell has increased, with fewer cases of holding back from selling. On the demand side, downstream LCO cathode manufacturers have a strong wait-and-see sentiment, with many orders already completed in early procurements, leading to inventory accumulation and lower willingness to stockpile. Therefore, this week, the market will mainly focus on executing existing orders, with an overall sluggish trading atmosphere. However, due to the still-high prices of raw cobalt salts, Co3O4 spot prices are expected to remain at high levels, with limited room for decline.

Nickel Sulphate:

On May 26, the SMM battery-grade nickel sulphate index price was 27,811 yuan/mt, with a quotation range for battery-grade nickel sulphate of 27,760-28,270 yuan/mt, and the average price remained stable WoW. Analyzing from the cost side, LME nickel has returned to fundamental factors, showing a weak performance, leading to a slight decline in the production costs of nickel salt smelters. On the demand side, nickel salt demand in June is expected to strengthen overall MoM. Recently, precursor plants have shown significantly increased inquiry activity for nickel salts, with enhanced purchase willingness. From the supply side, some nickel salt smelters have maintained stable quotations, while some have raised their quotation coefficients due to increased demand and limited raw material inventory. Looking ahead, next week is a traditional procurement period. Considering factors such as the market demand recovery in June and cost support for nickel salts, it is expected that nickel salt prices will increase somewhat next week.

Ternary Cathode Precursor:

On Monday, prices of 5-series, 6-series, and 8-series products in the ternary cathode precursor market all showed a slight decline. From the perspective of raw material costs, nickel sulphate and manganese sulphate prices remained stable, while cobalt sulphate prices slightly decreased. On the demand side, the overall performance of the large-power precursor market was relatively sluggish, with order transfers occurring among some manufacturers, but no significant increase in overall demand. Small-power and consumer-grade precursors have seen an increase in order volumes recently, but due to the small size of the consumer market, their demand-boosting effect on the entire market is limited. Additionally, some downstream ternary cathode material plants currently have relatively sufficient precursor finished product inventories and are in a destocking phase, with no urgent stockpiling needs, leading to a relatively sluggish trading sentiment recently. In terms of prices, due to weak terminal demand, it is difficult to increase the discount coefficients of current ternary cathode precursors. As the month-end approaches, cathode material manufacturers are entering a traditional stockpiling cycle, and the market trading sentiment is expected to turn positive this week.

Ternary Cathode Material:

On Monday, ternary cathode material prices continued to decline. In terms of raw material costs, nickel sulphate and manganese sulphate prices remained stable, while cobalt sulphate prices slightly decreased, and lithium chemical prices still showed a relatively obvious downward trend. On the demand side, the large-power NEV market has seen some recovery, with good sales performance for some car models. Additionally, some car models have been pre-stocked in anticipation of upcoming launches, providing certain support for ternary cathode material demand, but the overall volume is relatively limited. The consumer-grade and small-power markets have seen more orders recently, especially with good overseas market demand, but due to the small size of the consumer market, the overall increase is not significant. Recently, market trading sentiment has been weak, with basic stockpiling mainly as needed. Currently, June demand also appears relatively sluggish. In terms of price trends, it is expected that nickel sulphate prices will remain firm in the future, but lithium chemicals still have downside room. Affected by fluctuations in raw material prices, ternary cathode material prices may further decline.

LFP:

This week, the decline in LFP prices has slowed, with an overall decrease of about 365 yuan/mt, mainly due to the continuous decline in lithium carbonate prices this week, totaling a decrease of about 1,450 yuan/mt. On the market side, material plants' overall production has been relatively active this week, with output from top-tier material plants beginning to recover, but production at some second-tier material plants has declined, mainly due to adjustments in the downstream battery cell supply chain structure and a slight decline in downstream power orders. On the demand side, ESS demand continues to improve. On one hand, the US has reduced tariffs on China, and downstream battery cell plants are eager to rush exports, leading to a slight increase in orders. In terms of price settlement, the average price of iron phosphate showed a slight upward trend in April, with some LFP plants expecting an increase in processing fees for Q2, but no substantive results were achieved after negotiations and discussions with downstream battery cell plants. However, currently, the price of iron phosphate raw materials has begun to decline, so there is also an expectation for a certain price reduction in iron phosphate prices in May. Additionally, with some battery cell plants set to restart tenders in June, the probability of a price increase before that is low. Considering these two points, SMM expects that processing fees in Q2 will be difficult to increase.

Iron Phosphate:

This week, iron phosphate prices slightly decreased due to a slight decline in phosphoric acid prices on the raw material side, while industrial ammonium prices remained stable. The decline in iron phosphate prices has been significantly affected by unfavorable expectations for order demand, leading to relatively weak price support. Due to limitations in the processing costs of LFP, low-priced products are more likely to seize market share under poor market expectations. Therefore, the number of orders for high-priced iron phosphate has significantly decreased. As the end of May approaches, iron phosphate will gradually enter the order negotiation period for June while also preparing for orders in H2. It is expected that in June, listed companies will have a sales push and need to stabilize product prices in preparation for order price negotiations in H2.

LCO:

The LCO market has been under pressure to decline this week, with mainstream quotations for 4.2V/4.4V/4.5V products falling to 215,000 yuan/mt, 220,000 yuan/mt, and 231,000 yuan/mt, respectively. The price adjustments are mainly due to dual pressures from the raw material side: battery-grade lithium carbonate continues to decline, and Co3O4 prices have slightly loosened due to weak purchasing sentiment. On the supply side, top-tier enterprises have maintained high output through capacity releases. On the demand side, terminal manufacturers are preparing for the "618" sales promotion, driving a phased increase in battery cell plants' procurement demand. It is worth noting that the uncertainty in cobalt raw material supply brought about by changes in mining policies in the DRC continues to affect the shipping strategies of LCO cathode manufacturers, with market shipping remaining relatively cautious.

Anode:

This week, artificial graphite prices remained stable. On the cost side, prices for graphitisation tolling services have declined, and the price of coke, a raw material, has continued to fall due to weak downstream demand. Although costs have declined, due to production lag, this has not yet had a significant impact on artificial graphite prices. On the supply and demand side, frequent adjustments to tariff policies have led to a wait-and-see sentiment among participants in the upstream and downstream of the industry chain, inhibiting market trading activity. Looking ahead, costs are expected to further decline slightly. On the supply and demand side, during the 90-day waiting period after tariff policy adjustments, downstream enterprises may gradually release procurement demand to avoid potential cost increases. However, supply will still be relatively sufficient. Therefore, it is expected that anode material prices may show a downward trend in the future.
This week, there were no significant changes in the cost side or supply-demand dynamics of natural graphite. Consequently, the price of natural graphite anode material remained stable this period. Looking ahead, the technological gap in product performance and specifications between artificial graphite and natural graphite anode materials continues to narrow. Moreover, artificial graphite, with its significant price advantage, has become the preferred procurement choice for downstream enterprises. Therefore, even if tariff benefits boost demand, the actual increase in demand for natural graphite anode material will remain limited. Additionally, the long-standing issue of overcapacity in the industry has not been fundamentally resolved, and the market supply side will continue to remain abundant. With multiple factors overlapping, it is expected that the price of natural graphite anode material will continue to face downward pressure in the future.

Separator:

This week, the price of wet-process separators will remain stable, with mainstream quotations for 5μm/7μm/9μm products adjusted to 1.35 yuan, 0.76 yuan, and 0.74 yuan, respectively. The price of dry-process separators had a slight increase previously, with mainstream quotations for 12μm/16μm products reaching 0.45 yuan and 0.44 yuan. From the perspective of supply-demand structure, on the supply side, due to the long expansion cycle in the separator industry, the accumulated capacity from the previous period has not been fully absorbed, and the oversupply situation in the market will continue. On the demand side, benefiting from the downstream end-use market, procurement orders from battery cell enterprises have shown steady growth. It is expected that in the short term, separator prices will remain stable, with little likelihood of further changes.

Electrolyte

: This week, the price of electrolytes has decreased. On the cost side, the price of the core raw material, LiPF6, has decreased due to lower costs and no significant growth in demand. The prices of solvents and additives have also slightly decreased, leading to an overall reduction in the manufacturing cost of electrolytes. On the demand side, despite the rollback of US tariffs on China, this policy change has not yet effectively translated into the market demand for electrolytes. Downstream customers, based on cautious expectations of the market outlook, maintain conservative production and stockpiling strategies, adhering to the principle of "purchasing as needed." This has resulted in a continued lack of growth momentum in market demand, making it difficult to significantly boost the industry chain. On the supply side, major enterprises in the industry are continuously deepening the operational model of "produce based on sales." Despite the long-term low prices of electrolytes, some enterprises, to control costs and reduce losses, actively avoid orders with excessively low prices and obvious losses. However, due to the prominent issue of overall industry overcapacity, there are still other enterprises willing to accept short-term losses for sales, attempting to seize market share during this opportunity. Overall, it is difficult to achieve substantive improvements in the industry's supply-demand relationship in the short term, and there is a lack of strong positive factors to stimulate the market. It is expected that electrolyte prices will continue to maintain a slow downward trend in the coming period.

Sodium-ion battery:

Currently, traditional lithium battery cathode materials and battery cells have launched their own new sodium-ion battery products, and sodium-ion battery startups are accelerating the industrialization process. The sodium-ion battery industry chain is accelerating its maturity, with significant differentiation in technological routes. From the perspective of product displays, sodium iron pyrophosphate (NFPP) is becoming the mainstream cathode material direction. Moreover, new high-performance products are continuously being introduced, and the sodium-ion battery industry chain is accelerating its maturity, with increasingly significant differentiation in technological routes.

Recycling:

This week, the prices of lithium chemicals, cobalt salts, and other products continued to decline, while the price of nickel salts remained basically stable. This week, the coefficients for ternary black mass, LCO black mass, etc., also remained mediocre. Taking ternary black mass as an example: the current coefficient for ternary pole piece black mass is 74-76.5%, and the coefficient for ternary battery black mass is 71-72.5%. The lithium point for LFP pole piece black mass is 2,400-2,600 yuan/mtu, and the lithium point for LFP battery black mass is 2,100-2,250 yuan/mtu. On the supply side, the psychological selling prices of grinding mills and traders have loosened somewhat due to the continuous decline in salt prices, and there have also been some price reductions. However, the magnitude of these reductions is still slower than the decline in salt prices. Moreover, some grinding mills, as their current profits from the grinding process are still below the surplus line, have chosen to hold back from selling, waiting for a subsequent market recovery. Market transactions are sluggish, and it is expected that procurement volume in May will remain stable or slightly decrease compared to April on a MoM basis. On the demand side, most wet-process plants have chosen a semi-shutdown state amid the continuous decline in nickel, cobalt, and lithium salt prices. In particular, LFP wet-process plants have significantly reduced the frequency of externally purchasing black mass or have even halted production lines for maintenance or production cuts. They are only consuming basic inventory. Due to the market's pessimistic outlook on subsequent lithium salt prices, they are cautious about purchasing LFP black mass, resulting in very sluggish market transactions. On the cost side, except for leading integrated wet-process plants, the profits of most wet-process plants are still below the surplus line, especially LFP wet-process plants, which are greatly affected by the decline in lithium salt prices. The profits of the grinding process are slightly better than those of the wet-process, but the profits of the grinding process for some small and medium-sized plants continue to be inverted.

Downstream and end-use:

This week, the price fluctuations of DC-side battery cabins were relatively small. The average price of 5MWh DC-side battery cabins is 0.43 yuan/Wh, and the average price of 3.44/3.77MWh DC-side battery cabins is 0.438 yuan/Wh. As the node for the full marketization of on-grid tariffs for incremental projects under Document No. 136 approaches, the detailed rules for the participation of energy storage in the power market mechanisms in various provinces are being successively introduced. Before the finalization of these rules in each province, owners are mostly adopting a wait-and-see attitude. This week, the supply-demand pattern of the energy storage market remained stable, with minimal price fluctuations in DC-side battery cabins. SMM expects that the price of DC-side battery cabins may continue to fluctuate slightly in the short term.

On May 16, the winning bid results for the design, procurement, construction (EPC), and operation and maintenance (O&M) of the 1,000MW/6,000MWh power supply-side energy storage project in Chayouzhongqi, Ulanqab City, were announced. The project is located in Ulanqab City, Inner Mongolia Autonomous Region, with a scale of 1,000MW/6,000MWh. The bid winner's quotation was 6.25209997035 billion yuan, which translates to a winning bid unit price of 1.042 yuan/Wh after conversion.

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News:    

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[Canaan Intelligence: Wholly-owned subsidiary wins bid for cooperative investment and construction project of charging stations] Canaan Intelligence (300880.SZ) announced that its wholly-owned subsidiary, Jiachen Zhidian, has become one of the bid winners for Package 1 of Section FW-1 in the first public tender for procurement under the 2025 Service Authorization Framework Agreement of State Grid Hebei Electric Power EV Company. The awarded project is for the cooperative investment and construction of charging stations. This project is expected to have a positive impact on the company's operating performance and enhance its brand influence. However, it should be noted that the contract has not yet been signed, and there is a risk that the contract may not be fully performed or may be terminated. (Cailian Press)
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SMM New Energy Research Team

Wang Cong 021-51666838

Ma Rui 021-51595780

Lin Ziya 86-2151666902

Feng Disheng 021-51666714

Lv Yanlin 021-20707875

Zhou Zhicheng 021-51666711

Wang Zihan 021-51666914

Wang Jie 021-51595902

Zhang He 021-20707850

Zhang Haohan 021-51666752

Chen Bolin 021-51666836

Xu Mengqi 021-20707868