[SMM Analysis] Raw material supply is tight, dragging prices down, but prices may bottom out during the policy window period

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The LCO market was under pressure this week, with mainstream quotations for 4.2V/4.4V/4.5V products pulling back to 209,000 yuan/mt, 214,000 yuan/mt, and 225,000 yuan/mt, respectively. The price decline was mainly due to dual pressures from the raw material side: battery-grade lithium carbonate prices continued to fluctuate downward, and Co3O4 experienced an unexpected drop around the holiday. On the supply side, Co3O4 enterprises currently have relatively high inventory reserves, but the storage period for Co3O4 is short. Upstream willingness to sell has significantly increased, with active downward adjustments in quotations. Terminal producers are in the stage of digesting battery cell inventory, leading to a decrease in cathode material purchases. LCO cathode plants are relatively cautious in raw material procurement. In the short term, the support from raw material costs continues to weaken, and there is still downside room for LCO prices. In the medium and long term, based on the market's widespread expectation of a delayed implementation of mining policies in the DRC, it is expected that after this round of price bottoming, the clarification of policies in late June will drive LCO to enter a new upward cycle.

SMM New Energy Research Team

Wang Cong 021-51666838

Yu Xiaodan 021-20707870

Ma Rui 021-51595780

Xu Ying 021-51666707

Feng Disheng 021-51666714

Liu Yujun 021-20707895

Lv Yanlin 021-20707875

Zhou Zhicheng 021-51666711

Zhang Haohan 021-51666752

Wang Zihan 021-51666914

Ren Xiaoxuan 021-20707866

Liang Yushuo 021-20707892

Wang Jie 021-51595902

Xu Yang 021-51666760

Yang Lianting 021-51595835

Wang Zhaoyu 021-51666827