[SMM Cobalt & Lithium Morning Meeting Summary] Ternary cathode material prices decline, with potential for further decline in the future market

Lithium Ore:

This week, lithium ore prices continued the downward trend from last week, but the decline narrowed. For overseas mines, the reluctance to budge on prices remained strong, with SC6 quotations staying above CIF $630/mt, and mines were generally cautious about selling. Some traders, however, had a stronger willingness to sell due to factors such as hedging, transfer to delivery warehouse, and inventory pressure. On the demand side, as lithium carbonate prices are currently at a low level, buyers' acceptance of lithium ore prices has also decreased. Recently, spot transactions for SC6 at around CIF $600/mt have occasionally occurred in the market, guiding the downward trend in market prices to some extent. However, as current prices are approaching the cost line of mines and the decline in lithium carbonate prices has somewhat weakened, the price drop has decreased compared to last week. In the short term, with expectations of further declines in lithium carbonate prices, lithium ore prices may continue to fall, but the downside room is limited.

Lithium Carbonate:

This week, the spot price of lithium carbonate continued its downward trend, with the market's transaction center continuing to move lower. The average price of battery-grade lithium carbonate fell from 60,300 yuan/mt to 60,200 yuan/mt, a weekly decline of 100 yuan/mt; the average price of industrial-grade lithium carbonate fell from 58,700 yuan/mt to 58,600 yuan/mt, also a weekly decline of 100 yuan/mt. On the supply side, the phased rebound in the futures market in late May created a favorable hedging window for non-integrated lithium chemical plants. Some enterprises gradually increased their operating rates after locking in futures profits, and industry supply is expected to recover and grow in June. Meanwhile, lithium concentrate prices continued to weaken, and port inventory remained high, further weakening the cost support for lithium carbonate. Demand-side growth was limited. Affected by the adjustment of US tariff policies in mid-May, there was a certain installation rush for ESS battery cells, which will continue to drive an upward trend in ESS battery cell production schedules in June. However, as NEVs have entered the off-season, power battery cell production schedules have pulled back. Overall, supported by the growth in ESS battery cells, downstream demand in June is expected to remain relatively stable.

Lithium Hydroxide:

This week, lithium hydroxide prices continued to decline. In terms of market sentiment, most ternary cathode material producers had relatively low spot order demand and weak purchase willingness; upstream producers, due to high inventory levels and relatively limited sales channels, have somewhat loosened their reluctance to budge on prices. Coupled with the continuous decline in lithium carbonate prices and the relatively low lithium ore prices, which have weakened cost support, lithium hydroxide prices have been dragged down. On the supply side, lithium hydroxide production in May remained basically stable MoM: some enterprises' new production lines have achieved certain ramp-up, contributing a certain increase to overall output, but the overall impact was not significant. In June, some smelting enterprises are expected to carry out technological transformation during shutdowns, but at the same time, the ramp-up of new production lines at some enterprises will supplement overall production. Overall, production schedules are basically flat MoM after accounting for increases and decreases.

Refined Cobalt:

This week, the spot price of refined cobalt declined slightly. On the supply side, the market is still digesting the rhythm of social inventory, and the economic efficiency of refined cobalt production is relatively low. Smelters' capacity utilization rates have slightly decreased, and quotations have declined slightly. On the demand side, downstream producers' purchase rhythm has not changed significantly, maintaining just-in-time procurement, and inquiries and purchases have been relatively mediocre. It is expected that next week, the spot price of refined cobalt may continue to fluctuate.

Intermediate Products:

The spot price of cobalt intermediate products declined slightly. On the supply side, traders' quotations have slightly decreased. On the demand side, due to uncertainty about subsequent policies in the DRC, downstream producers are generally dominated by wait-and-see sentiment. Additionally, prices of cobalt-related products have declined somewhat recently, further exacerbating producers' wait-and-see sentiment. This week, inquiries and purchases of cobalt intermediate products have been relatively mediocre. It is expected that next week, the spot price of cobalt intermediate products may fluctuate weakly.

Cobalt Salts (Cobalt Sulphate and Cobalt Chloride):

This week, the spot price of cobalt sulphate was in the doldrums. On the supply side, quotations from mainstream smelters have not changed much, and spot quotations for cobalt sulphate from some recycling plants have slightly declined. On the demand side, given the uncertainty about future policies in the DRC, downstream producers generally have a wait-and-see sentiment, and the order situation of material plants has not improved significantly. Therefore, downstream purchase willingness remains low, and there have been no volume-based procurement actions. It is expected that next week, the spot price of cobalt sulphate will still fluctuate weakly.

This week, the spot price of cobalt chloride corrected slightly. The supply side presented a differentiated pattern: quotations from mainstream smelters remained firm, with a clear willingness to hold prices; however, some producers' willingness to sell at high prices increased, leading to sporadic low-price transactions in the market, forming phased pressure on spot prices. On the demand side, downstream enterprises currently have relatively sufficient inventory, market inquiries are sluggish, and wait-and-see sentiment continues to prevail. It is worth noting that the market's bullish expectations remain highly aligned and have not fundamentally wavered. Overall, it is expected that next week, the spot price of cobalt chloride will continue to fluctuate at highs, with limited downside room for adjustment.

Cobalt Salts (Co3O4):

This week, Co3O4 prices fell sharply. On the supply side, the market was relatively sluggish after the holiday. Most smelters lowered their quotations and increased their willingness to sell, with some low-price transactions further pulling down spot prices. On the demand side, LCO producers only maintained necessary procurement without the intention of stockpiling inventory, generally maintaining a wait-and-see attitude. Their acceptance of Co3O4 prices decreased, and market inquiries remained scarce. It is expected that next week, the market's purchase peak has not yet arrived, demand will remain weak, lacking significant upward momentum, and spot prices are expected to continue to decline.

Nickel Sulphate:

On June 5, the SMM battery-grade nickel sulphate index price was 27,610 yuan/mt, and the quotation range for battery-grade nickel sulphate was 27,580-28,050 yuan/mt, with the average price weakening compared to yesterday. In terms of costs, LME nickel prices fluctuated today. On the demand side, although nickel sulphate demand in June showed signs of recovery MoM, overall demand remained in a sluggish phase. Affected by some raw material inventory and weak order demand, the inquiry and transaction activity of precursor enterprises for nickel sulphate were low during this week's traditional procurement period. On the supply side, nickel salt producers' order signing situation in June was poor this week, and some large nickel salt enterprises plan to carry out shutdown maintenance in June. Given weak demand coupled with declining costs, some nickel salt producers' quotations have shown signs of loosening. Looking ahead, considering the continued sluggishness of downstream demand and the weakening of some buyers' bargaining power, it is expected that nickel salt prices may further weaken in the short term.

Ternary Cathode Precursor:

This week, prices of 5-series, 6-series, and 8-series products in the ternary cathode precursor market continued to decline. In terms of raw material costs, nickel sulphate, cobalt sulphate, and manganese sulphate all showed a slight downward trend. In the NEV market, there was a relatively significant increase in domestic orders for 6-series products. In contrast, demand for 5-series products was weak, and their market share is expected to continue to shrink; while 8-series products remained relatively stable. It is expected that there will be a slight recovery in the NEV market in June. In the consumer market, as producers had completed a certain scale of raw material stockpiling in March and April, and with raw material prices continuing to fall, market sentiment has turned cautious, gradually entering a destocking phase. Orders for consumer products in June are expected to decrease. In terms of price trends, affected by the continuous decline in nickel sulphate and cobalt sulphate prices and weak overall demand, there is still room for further declines in precursor prices.

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. Lithium carbonate and lithium hydroxide prices have not yet hit bottom and continue to be under pressure. In the NEV market, terminal auto sales fell short of expectations, leading to weak demand for cathode materials and a gloomy market sentiment. Except for some leading battery cell manufacturers with increased orders, overall demand remained sluggish. In the consumer market, although overseas demand has risen, as producers had carried out a certain degree of advance stockpiling during the rise in raw material prices in March and April, and now facing the downward trend in raw material prices, the market is bearish on cobalt salts and lithium salts. Additionally, as stockpiling for the '618' shopping festival has ended, enterprises have generally shifted to destocking operations. In terms of price trends, there is still room for further declines in lithium carbonate, nickel sulphate, and cobalt sulphate prices. Affected by fluctuations in upstream raw material prices, ternary cathode material prices may still have downside potential.

LFP:

This week, LFP prices continued to decline, with an overall decrease of about 175 yuan/mt, mainly due to the continuous decline in lithium carbonate prices this week, which fell by about 500 yuan/mt in total. On the market side, material plants' overall production was relatively active this week. Especially affected by the reduction in US tariffs, the recovery of material plants' ESS orders was more obvious, but power orders declined slightly, and overall weekly production maintained an increase. On the demand side, affected by the reduction in US tariffs on China, the downstream battery cell market's production was active, accelerating the pace of strong exports, and orders were relatively full.

Iron Phosphate:

In June, the raw material prices of iron phosphate remained stable. Supported by cost side, it is difficult for low prices to fall sharply. However, due to fierce market competition, high-end iron phosphate faces the risk of being replaced, and some enterprises choose to adopt a "volume discount" strategy. Prices are constrained by the tug-of-war between cost side and supply and demand, and are expected to continue fluctuating rangebound. There may still be a slight downward space for high-end products, while low and mid-end iron phosphate will maintain stability relying on the cost floor.

LCO:

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

Anode:

This week, prices of some artificial graphite declined slightly. In terms of supply and demand, with the end of the auto show and the cancellation of mandatory energy storage allocation, overall market trading activity was weak, and supply appeared relatively sufficient. On the cost side, due to weak downstream demand, the production cost of anode materials has decreased. Therefore, this week, the price of artificial graphite anode materials showed a downward trend. Looking ahead, the cost side may continue to weaken, and the supply side will still be relatively abundant. Therefore, it is expected that the price of artificial graphite anode materials may continue to face downward pressure.
This week, there were no significant fluctuations on either the cost side or the supply-demand side, and the prices of natural graphite anode materials remained stable. Looking ahead, with the continuous upgrading of artificial graphite technology, the traditional advantages of natural graphite anode materials in terms of product performance are gradually diminishing. Some downstream demand that originally relied on natural graphite may gradually shift towards artificial graphite, compounded by the severe issue of overcapacity in the industry. Therefore, 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 overall. Mainstream quotations for wet-process separators were: 5μm at 1.35 yuan/m², 7μm at 0.76 yuan/m², and 9μm at 0.74 yuan/m². Mainstream quotations for dry-process separators were: 12μm at 0.45 yuan/m² and 16μm at 0.44 yuan/m². In terms of supply-demand structure, on the supply side, constrained by the long release cycle of industry capacity, the accumulated stock capacity from the previous period has not yet been fully absorbed, and the market continues to exhibit a pattern of supply surplus. On the demand side, there is a divergent trend: demand in the power battery sector is weak, while demand in the ESS sector slightly exceeds previous market expectations, collectively driving a slight MoM increase in the industry's total demand. Based on the current supply-demand balance, it is expected that separator prices will remain stable in the short term, with limited fluctuations.

Electrolyte

This week, electrolyte prices remained stable. On the cost side, the price of LiPF6, a core raw material for electrolytes, showed a downward trend due to the combined effects of declining lithium fluoride prices and sluggish market demand, but the decline was relatively small. Meanwhile, the market prices of solvents and additives remained relatively stable. As a result, the overall manufacturing cost of electrolytes did not decrease significantly, and the cost side maintained a relatively stable pattern. On the demand side, the withdrawal of the mandatory energy storage allocation policy has brought short-term pressure on demand contraction in the market, but the reduction in US tariffs on Chinese goods has also provided some positive stimulus. Affected by multiple factors, downstream customers' production and stockpiling behaviors have become more conservative, generally maintaining a "purchase as needed" strategy. This has resulted in weak growth momentum in market demand and limited overall boosting effect on the entire electrolyte industry chain. On the supply side, top-tier enterprises in the industry are continuously deepening the "produce based on sales" operational model. Against the backdrop of electrolytes' long-term low prices, some enterprises actively avoid orders with small profit margins or even losses. However, constrained by the deep-rooted contradiction of overall industry overcapacity, some enterprises still choose to maintain sales at the cost of short-term losses. Considering multiple factors, it is expected that electrolyte prices will continue to fluctuate rangebound in the future.

Sodium-ion battery:

The cathode materials in the sodium-ion battery industry chain are leading the industry with their technological and capacity advantages, with NFPP becoming the core growth engine. Anode materials are constrained by raw material and technological bottlenecks, resulting in delayed capacity release. Electrolytes exhibit a "produce based on sales" characteristic due to demand fluctuations. The battery cell segment benefits from the expansion of downstream application scenarios, showing significant growth potential. Overall, despite the different development paces of various segments, the sodium-ion battery industry is accelerating towards large-scale production, and its future market space in areas such as ESS and transportation is worth anticipating.

Recycling:

This week, prices of products such as lithium chemicals and cobalt salts continued to decline, while nickel salt prices remained stable. The coefficients for ternary and LCO black mass also continued to decline this week. The lithium points for LFP pole piece black mass were 2,250-2,400 yuan/mtu, and for LFP battery black mass were 2,050-2,200 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 is 70-72%. 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. Most ternary and LFP wet-process plants have reduced their procurement volumes this month, only consuming basic inventory. Due to the market's pessimistic outlook on subsequent lithium salt prices, they are cautious in purchasing LFP black mass, resulting in very sluggish market transactions. It is expected that there will be at least a 20% MoM decrease or even more in May procurement, with June expected to remain basically flat. On the supply side, the psychological selling prices of grinding mills and traders have loosened somewhat with the continuous decline in salt prices, and black mass prices have generally followed the downward trend of salt prices, but the decline is still slower than the rate of salt price decline. Moreover, as the profits of some grinding mills are still below the surplus line at this stage, some have chosen to hold back from selling, waiting for a subsequent market recovery. Market transactions are sluggish, and it is expected that May procurement volumes 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 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 grinding mills are slightly better than those of wet-process plants, but the profits of some small and medium-sized grinding mills continue to be inverted.

Downstream and Terminal:

This week, the price fluctuations of DC-side battery cabins were small. The average price of 5MWh DC-side battery cabins was 0.432 yuan/Wh; the average price of 3.44/3.77MWh DC-side battery cabins was 0.437 yuan/Wh. As the first week after the node of full marketization of on-grid tariffs for new energy projects under Document No. 136, owners and integrators have mostly adopted a wait-and-see attitude. The ESS market remains stable overall, with small price fluctuations in DC-side battery cabins. SMM expects that the prices of DC-side battery cabins may continue to decline slightly in the short term.
On May 30, the shortlisted candidates for the energy storage system equipment procurement project of the 2 million kW "Power Transmission from Alxa to Urumqi" Regional Mutual Aid New Energy Project were announced. Within the Alxa League High-tech Industrial Development Zone (Wusitai Town) in the Inner Mongolia Autonomous Region, it is planned to adopt LFP electrochemical grid-forming energy storage equipment with a total capacity of 300MW/600MWh. The first shortlisted candidate offered a bid of 276 million yuan, with a winning unit price of 0.46 yuan/Wh after conversion. The second shortlisted candidate offered a bid of 288.12 million yuan, with a winning unit price of 0.48 yuan/Wh after conversion. The third shortlisted candidate offered a bid of 286.8 million yuan, with a winning unit price of 0.478 yuan/Wh after conversion.

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News:    

[Ministry of Commerce Responds to "Cut-throat Competition" in the Automotive Industry: Strengthening Comprehensive Rectification and Compliance Guidance] The Ministry of Commerce held a regular press conference on the 5th, where a spokesperson introduced the recent key work in the commerce sector. A reporter asked questions related to the automotive industry. He Yongqian, the spokesperson for the Ministry of Commerce, stated that recently, relevant departments and bureaus of the Ministry of Commerce organized symposiums with industry associations, research institutions, and relevant enterprises to listen to opinions and suggestions and study further measures to improve the circulation and consumption of automobiles. Next, the Ministry of Commerce will work with relevant departments to continue strengthening tracking, research, and policy guidance for the automotive consumer market, promoting the removal of bottlenecks and obstacles that constrain the circulation and consumption of automobiles, and better meeting the diverse and personalized consumption needs of residents. In response to the current "cut-throat competition" phenomenon in the automotive industry, the Ministry of Commerce will actively cooperate with relevant departments to strengthen comprehensive rectification and compliance guidance, maintain a fair and competitive market order, and promote the healthy development of the industry. (Financial Associated Press)
[EU Selects 13 Foreign Strategic Raw Material Support Projects, Including a Graphite Mine in Greenland] To ensure access to critical raw materials, the European Commission has selected 13 strategic projects located outside the EU, including a graphite mine in southern Greenland. The European Commission stated in a declaration that these projects will receive "coordinated support" from the Commission, member states, and financial institutions, facilitating financing and connections with relevant buyers. The Commission estimates that a total capital investment of 5.5 billion euros will be required to launch and operate these 13 projects. These projects involve strategic raw materials such as lithium, nickel, cobalt, manganese, graphite, and rare earths. Other projects are located in Canada, Kazakhstan, Norway, Serbia, Ukraine, Zambia, New Caledonia, Brazil, Madagascar, Malawi, South Africa, and the UK. The newly selected projects will complement the list of 47 strategic projects already adopted within the EU on March 25. (Financial Associated Press)
[US EV Company Lucid Signs Graphite Contracts in Succession, Secures Mines to Build Local Supply Chain] US electric vehicle (EV) company Lucid announced on its official website on Wednesday local time that it had reached a multi-year supply agreement with Graphite One to source natural graphite from the US. According to the agreement, Graphite One is expected to commence production in 2028, supplying natural graphite to Lucid and its battery suppliers. The press release mentioned that Graphite One's natural graphite comes from the Graphite Creek deposit located north of Nome, Alaska, US. This agreement builds on the contract signed by both parties in 2024, with Graphite One having committed to supplying Lucid with artificial graphite for future car models from its proposed anode active material (AAM) factory in Warren, Ohio. (Financial Link)

SMM New Energy Research Team

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Lv Yanlin 021-20707875

Zhou Zhicheng 021-51666711

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Zhang He 021-20707850

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