[SMM Cobalt & Lithium Morning Meeting Summary] Lithium battery raw material prices decline, market trading sluggish

Lithium Ore:

This week, lithium ore prices continued to fall WoW, mainly due to the overcorrection of lithium carbonate prices, which led to an upward price transmission to lithium ore. Since late May, mines have become more cautious and less willing to sell, given the lower downstream bargaining power and their own cost support; some traders, under inventory and capital turnover pressure, showed a stronger willingness to sell; on the demand side, with the accelerated decline in lithium carbonate prices, buyers' acceptance of higher ore prices has decreased, leading to a general reluctance to purchase at relatively high levels. Additionally, new low-price transactions for lithium ore have emerged, pushing market prices further down.

In the lepidolite sector, continuously falling lithium chemical prices have dampened the production enthusiasm of small and medium-sized lithium chemical plants, forcing some to maintain low operating rates, and current lithium ore inventories remain at low levels. In terms of procurement, acceptable high-grade lepidolite concentrate is below 1,500 yuan/mt; on the supply side, major suppliers currently have no intention to auction and release shipments, while smaller traders, facing low quotations from lithium chemical plants, show weak transaction willingness, resulting in a generally sluggish market.

Lithium Carbonate:

This week, the spot lithium carbonate market continued its previous weak trend, with the price center continuously declining, accumulating a drop of 1,500 yuan/mt. The continuous decline in lithium carbonate prices, besides being significantly influenced by the oversupply in the market, is also closely related to the sharp fall in lithium ore prices. As cost support continues to weaken, lithium carbonate prices are further dragged down. From this week's market transactions, trading activities have slightly warmed up compared to last week, and the purchasing willingness of downstream material plants has improved compared to early and mid-month. However, with a high proportion of long-term contracts, the increase in purchases remains limited. On the supply side, the slight rebound in futures prices provided non-integrated lithium chemical plants with opportunities for hedging and resuming production, leading to an expected increase in market supply. Meanwhile, the continuous decline in lithium ore prices has gradually weakened cost support, further suppressing lithium carbonate prices. Overall, under the backdrop of oversupply, the lithium carbonate market is expected to continue to be in the doldrums in the short term, with prices likely to remain under pressure.

Lithium Hydroxide:

This week, the decline in lithium hydroxide prices intensified. Market sentiment-wise, most downstream purchases of lithium hydroxide are dominated by long-term contracts and customer supplies, leaving little room for spot orders without significant demand growth; on the supply side, recent production rhythms of most enterprises have been relatively stable, but with high inventories and single sales channels, their stance on refusing to budge on prices has somewhat softened, and transaction discounts have declined compared to earlier. Coupled with the continuous bottoming out of lithium carbonate prices and the weakening cost support from rapidly falling lithium ore prices, lithium hydroxide prices are under pressure.

Refined Cobalt:

This week, refined cobalt spot prices continued to weaken. From the supply side, as the economic viability of refined cobalt production decreases, monthly output has slightly declined, and smelters continue to fulfill long-term contracts, with the spot market still relying on trader supplies. However, recent news has stirred market sentiment, driving down refined cobalt transaction prices, leading to some panic selling, which appears to be a short-term emotional release, with no significant change in the actual supply and demand structure. On the demand side, downstream producers maintain a just-in-time procurement rhythm, and there has been no significant improvement in purchase willingness. It is expected that next week, refined cobalt spot prices may continue to weaken.

Cobalt Intermediate Products:

This week, cobalt intermediate products weakened. On the supply side, mines continue to steadily supply long-term contract customers, and spot quotes from traders have slightly adjusted. Despite mixed market information, the subsequent policies from DRC have not yet been announced, potentially only affecting short-term trading sentiment, with no significant improvement in actual supply and demand. On the demand side, after a round of procurement, recent downstream purchase willingness has slightly decreased, and with poor feedback on cobalt salt sales, smelters have become more sensitive to raw material prices, resulting in flat inquiries and purchases for cobalt intermediates this week. It is expected that in the near future, cobalt intermediate spot prices may slightly weaken.

Cobalt Salts (Cobalt Sulphate and Cobalt Chloride):

This week, cobalt sulphate spot prices continued to decline. From the supply side, mainstream smelter quotations have not changed, but recycled cobalt sulphate spot prices continue to fall significantly, with extremely sporadic transactions far below quoted prices. On the demand side, overall purchasing sentiment among downstream producers is poor, with no improvement in material plant orders, and raw materials are still in the destocking phase, leading to a continuous decrease in purchasing willingness, with only fixed inquiries and no buying actions. It is expected that next week, cobalt sulphate spot prices may continue to weaken.

This week, cobalt chloride prices declined. From the supply side, major smelters' quotations remained firm, showing a certain degree of reluctance to sell. However, some smelters had a strong willingness to sell, leading to a few low-price transactions, pulling down the overall spot price. On the demand side, downstream enterprises mainly conducted just-in-time procurement, with a certain level of cobalt salt inventory, resulting in fewer inquiries and a strong wait-and-see atmosphere. Despite this, due to the ongoing shortage of raw materials, the market's bullish sentiment remains high and consistent. It is expected that next week, cobalt chloride spot prices will continue to fluctuate at highs, making it difficult for them to decline.

Cobalt Salts (Co3O4):

This week, Co3O4 prices continued to decline. From the supply side, smelter quotations saw a slight decrease, and the willingness to sell increased; on the demand side, most LCO manufacturers have completed their order purchases and hold some inventory, adopting a wait-and-see attitude with low stockpiling intentions. Therefore, this week's market transactions mainly focused on executing existing orders, with low overall activity. However, due to the high raw material cobalt salt prices, the downside room for Co3O4 spot prices is limited in the short term, and they are expected to continue fluctuating at highs.

Nickel Sulphate:

On May 29, the SMM battery-grade nickel sulphate index price was 27,705/mt, with the quotation range for battery-grade nickel sulphate at 27,700-28,130 yuan/mt, and the average price weakened compared to last week. In terms of costs, LME nickel prices today pulled back slightly to $15,125, weakening cost support. From the demand side, although June nickel salt demand shows signs of warming up MoM, overall demand remains sluggish. Affected by some raw material inventory and weak order demand, the inquiry and transaction activity of precursor companies during this traditional procurement period were low. On the supply side, the signing of June orders for nickel salt producers was unsatisfactory, and some large nickel salt enterprises plan to conduct maintenance shutdowns in June. Given the weak demand and declining costs, some nickel salt producers have already shown signs of softening quotations. Looking ahead, considering the continued mediocre demand and reduced bargaining power of some buyers, nickel salt prices are expected to further weaken in the short term.

Ternary Cathode Precursors:

This week, the prices of 5-series, 6-series, and 8-series ternary cathode precursors continued to decline. In terms of raw material costs, nickel sulphate and manganese sulphate prices dropped slightly, while cobalt sulphate showed a more pronounced downward trend. In the NEV market, overall performance in May was poor, with supply volumes contracting MoM from April. It is expected that June will see some recovery, especially with some car models preparing for launch and pre-stocking, leading to a noticeable increase in 6-series product orders. In contrast, 5-series product demand was weak, and its market share is expected to continue shrinking; 8-series products, however, remained relatively stable. In the consumer market, since manufacturers completed a certain scale of raw material stockpiling in March and April, the market sentiment has turned cautious, gradually entering a destocking phase, and it is expected that consumer product orders will decrease in June. In terms of price trends, the continuous decline in cobalt sulphate prices and overall weak demand suggest that precursor prices still have room to fall.

Ternary Cathode Material:

This week, ternary cathode material prices continued to decline. In terms of raw material costs, nickel sulphate, cobalt sulphate, and manganese sulphate all showed a slight downward trend, while lithium carbonate and lithium hydroxide prices have not yet hit bottom and continue to face pressure. In the NEV market, terminal auto sales fell short of expectations, leading to weak demand for cathode materials and a depressed market sentiment. Apart from a few top-tier battery cell manufacturers seeing an increase in orders, overall demand remained sluggish. In the consumer market, although overseas demand has risen, manufacturers, having pre-stocked raw materials during the price hike in March and April, now face a downward trend in raw material prices, leading to a bearish outlook on cobalt and lithium salts. Enterprises generally shifted to destocking, with a strong wait-and-see attitude. Overall, the market's expectation for June is bearish, and the supply side may see some contraction. In terms of price trends, lithium carbonate and cobalt sulphate still have room to fall, and ternary cathode material prices, influenced by upstream raw material price fluctuations, may continue to decline.

LFP:

This week, LFP prices maintained a downward trend, with an overall decrease of about 510 yuan/mt, mainly due to the continuous decline in lithium carbonate prices, which fell by approximately 2,150 yuan/mt. On the market side, material plants were generally active in production this week, particularly benefiting from the reduction in US tariffs, leading to a noticeable recovery in ESS orders, though NEV orders slightly declined, with overall weekly production maintaining an increase. On the demand side, the overseas ESS market, influenced by the reduction in US tariffs on China, saw active production from downstream battery cell manufacturers, accelerating export progress, and full orders, with material plants slightly destocking.

Iron Phosphate:

This week, iron phosphate prices remained stable, with raw material prices holding steady. As we approach the end of May, the iron phosphate market is entering the June negotiation period, with companies focusing on stabilizing prices. Considering potential shipment pressure in June and downstream cost-reduction needs, there may be a slight adjustment in June prices to secure orders. Iron phosphate production in May saw only a slight increase compared to April, and with new capacity set to come online in June, this could intensify cut-throat competition and impact H2 negotiations.

LCO:

The LCO market faced downward pressure this week, with mainstream quotations for 4.2V/4.4V/4.5V products dropping to 214,000 yuan/mt, 219,000 yuan/mt, and 230,000 yuan/mt, respectively. Price adjustments were mainly driven by dual pressures from the raw material side: battery-grade lithium carbonate prices continued to oscillate downwards, and Co3O4 market transactions were sparse, with prices slightly declining. On the supply side, upstream Co3O4 enterprises have high inventories, but the market generally holds a long-term bullish view on cobalt prices, leading to a clear reluctance to budge on prices. On the demand side, terminal manufacturers are still digesting battery cell inventories, leading to a slight decrease in LCO cathode demand, but LCO cathode manufacturers, with low raw material inventories, still show good purchasing willingness. Currently, both upstream and downstream players are waiting for DRC policy announcements at the end of June, so the market is expected to remain sluggish in the first half of June.

Anode:

This week, artificial graphite market prices remained stable. In terms of supply and demand, the market was characterized by a strong wait-and-see attitude due to tariff adjustment news, with overall trading activity remaining weak. On the cost side, graphitisation tolling service prices declined, and raw material coke prices continued to fall due to weak downstream demand. Despite the cost decline, anode producers, unwilling to lower quotations due to long-term losses, are still in a price negotiation phase. Looking ahead, costs are expected to decline slightly further; on the supply and demand side, downstream enterprises may release procurement demand during the 90-day tariff cooling-off period, but supply will remain ample. Therefore, it is expected that anode material prices may decline in the future.
This week, amidst a backdrop of no significant fluctuations in either cost or supply and demand, the prices of natural graphite anode materials remained stable. Looking ahead, the performance gap between artificial graphite and natural graphite anode materials is gradually narrowing. Moreover, artificial graphite exhibits a significant price advantage, making it the preferred procurement choice for downstream enterprises. Therefore, even if favorable tariff policies may boost demand growth, the demand increase for natural graphite anodes will still be limited. Coupled with the unresolved issue of long-standing overcapacity in the industry, it is expected that the prices of natural graphite anode materials will continue to face downward pressure in the future.

Separator:

This week, separator prices remained stable, with mainstream quotations for wet-process separators of 5μm/7μm/9μm at 1.35 yuan, 0.76 yuan, and 0.74 yuan, respectively. For dry-process separators of 12μm/16μm, the mainstream quotations were 0.45 yuan and 0.44 yuan, respectively. From the perspective of supply and 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, resulting in a persistent oversupply in the market. On the demand side, terminal power demand has weakened somewhat, while ESS demand is slightly better than previous market expectations, leading to a slight increase in overall demand. It is expected that separator prices will remain stable in the short term, with low likelihood of fluctuations.

Electrolyte

This week, electrolyte prices declined. On the cost side, the price of LiPF6, a core raw material for electrolytes, has been under pressure due to the continuous decline in the price of lithium fluoride, an upstream raw material, and the lack of significant growth in market demand. Meanwhile, the prices of solvents and additives have also experienced slight decreases to varying degrees, leading to a reduction in the overall manufacturing cost of electrolytes. On the demand side, the impact of the US's tariff reduction on China has not yet effectively translated into the electrolyte market demand in the short term. Downstream customers continue to maintain conservative production and stockpiling strategies, primarily focusing on "purchasing as needed," resulting in weak growth momentum in market demand and a limited boost to the industry chain. On the supply side, top-tier enterprises in the industry are continuously deepening their "produce based on sales" operational model. Against the backdrop of long-term declining electrolyte prices, some enterprises will proactively avoid orders with slim profit margins or even losses. However, constrained by the deep-rooted issue of overall industry overcapacity, some enterprises still choose to maintain sales at the cost of short-term losses, attempting to accelerate market share capture through low-price strategies. Considering multiple factors, it is expected that electrolyte prices will continue to face downward pressure in the future.

Sodium-ion Battery:

This week, the sodium-ion battery market made notable progress. On May 26th, Qingna Technology's 10GWh Phase I intelligent factory for large cylindrical sodium-ion batteries commenced operations, injecting vitality into the industry. In terms of the market trends for sodium-ion battery cathodes and anodes, the demand for cathode materials from the downstream ESS market has led to rapid growth in products following the polyanion route. However, anode materials remain a bottleneck for the industrialisation of sodium-ion batteries. Although there are potential materials like hard carbon, they still face challenges in terms of cost and process. Overall, sodium-ion batteries, with their advantages of abundant resources and low cost, continue to expand in fields such as two-wheelers and ESS. With the release of new capacities and accelerated technological iterations, they are expected to occupy an important position in the future new energy market.

Recycling:
This week, the prices of products such as lithium chemicals and cobalt salts continued to decline, while the price of nickel salts experienced a slight correction with limited upward movement. This week, the coefficients for ternary and LCO black mass also continued to decline. Specifically, the lithium points for LFP pole piece black mass ranged from 2,350 to 2,450 yuan/mtu, and for LFP battery black mass, from 2,000 to 2,200 yuan/mtu. Taking ternary black mass as an example: the current coefficient for ternary pole piece black mass is 74-76%, and for ternary battery black mass, 70-72%. On the demand side, most wet-process plants have chosen a semi-shutdown state amidst the continuous decline in nickel, cobalt, and lithium salt prices. Most ternary and LFP wet-process plants have reduced their procurement volumes this month, only consuming basic inventory. Given the market's pessimistic outlook on future lithium salt prices, they are cautious in purchasing LFP black mass, resulting in very sluggish market transactions. It is expected that procurement in May will decrease by at least around 20% MoM or even more, with June expected to remain basically flat. 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 black mass prices have generally followed the downward trend of salt prices, albeit at a slower pace. Moreover, some grinding mills, with their current profits still below the surplus line, have chosen to hold back from selling, waiting for a subsequent market recovery. Market transactions remain sluggish, and it is expected that procurement volumes in May will remain stable or slightly decrease compared to April. On the cost side, except for top-tier integrated wet-process plants, the profits of most wet-process plants still remain below the surplus line, with LFP wet-process plants particularly affected by the decline in lithium salt prices. While the profits of grinding mills are slightly better than those of wet-process plants, the profits of some small and medium-sized grinding mills continue to be upside down.

Downstream and Terminal:

This week, the prices of DC-side battery cabins continued to decline slightly. The average price for 5MWh DC-side battery cabins was 0.43 yuan/Wh, while for 3.44/3.77MWh DC-side battery cabins, it was 0.437 yuan/Wh. This week marks the final week before the full marketization of on-grid tariffs for incremental projects under Document No. 136. The uncertainty surrounding the economic viability of ESS allocation for future new energy projects is expected to lead to a decrease in ESS demand. To secure existing orders in the market, ESS integrators have adopted price reduction strategies, resulting in a slight decline in the prices of DC-side battery cabins this week. SMM expects that the prices of DC-side battery cabins may continue to decline slightly in the short term.
On May 28, the winning bid result for the EPC (Engineering, Procurement, and Construction) contract of the 400MW/800MWh ESS power station project in Pingding County was announced. The project, located in Pingding County, Yangquan City, Shanxi Province, plans to construct a 400MW/800MWh prefabricated container-based ESS station, including battery containers, PCS step-up integrated units, and a newly built 220kV step-up substation. The bid winner offered a price of 101.49 million yuan, which translates to a winning unit price of 1.269 yuan/Wh after conversion.

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News:    

[CosMX Battery: Change in Investment Project Content, Total Investment Remains at 4 Billion Yuan] CosMX Battery (688772.SH) announced that the company originally planned to invest 4 billion yuan in a high-performance new-type lithium-ion battery project. Now, the investment subject has been changed to include the company and its wholly-owned subsidiary, with the construction content adjusted to focus on the production of consumer battery products. The total investment in the project remains unchanged at 4 billion yuan, and the overall plan is to commence production within 2028. This change does not constitute a related-party transaction or a major asset restructuring.
[Jiyao Tongxing, a Battery Company Under Geely Group: Expected to Achieve 70GWh Battery Production Capacity by 2027] Zheng Xin, Vice President and Chief Strategy Officer of Geely Holding Group, as well as CEO of Jiyao Tongxing, stated that Jiyao Tongxing will achieve a battery production capacity of 70GWh by 2027, with eight production sites in Tonglu, Quzhou, Jianhu, Ganzhou, Shangrao, Yingtan, Ningguo, and Zaozhuang. In terms of business model, Jiyao Tongxing will strive to explore the vehicle-battery separation and battery swapping models, and establish a battery bank. Note: Zhejiang Jiyao Tongxing Energy Technology Co., Ltd. (hereinafter referred to as "Jiyao Tongxing") is the main entity for Geely Holding Group's battery business.
[Toyota: Global Auto Sales by Parent Company Alone Increased 10% YoY in April] Toyota announced that global auto sales by its parent company alone increased 10% YoY in April, reaching 876,864 units; Japan's auto production by its parent company alone increased 6.9% YoY in April, reaching 268,957 units; overseas vehicle production by its parent company alone increased 8.2% YoY in April, reaching 545,830 units; and global auto production by its parent company alone increased 7.8% YoY in April, reaching 814,787 units. (Financial News Agency)

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