[SMM Cobalt & Lithium Morning Meeting Summary] Supply Declines, Demand Weakens, Refined Cobalt Prices Fall This Week

Lithium Ore:

At the beginning of this week, lithium ore prices remained stable WoW. Overseas mines continued to hold firm on prices, with SC6 quoted at CIF $630/mt and above. There was a strong wait-and-see sentiment, and the willingness to sell was relatively moderate. Downstream lithium chemical plants currently had adequate lithium ore inventory, and their willingness to purchase at high prices was weak. Additionally, with lithium carbonate prices fluctuating around 60,000 yuan/mt recently, the downward momentum in prices was limited. The overall market transaction situation was relatively mediocre.

Lithium Carbonate:

At the beginning of this week, the price center of spot lithium carbonate transactions remained stable. Currently, the spot price of lithium carbonate continued to fluctuate rangebound, with the market showing a tug-of-war between supply and demand. The purchase willingness of downstream material plants was relatively low, with most enterprises maintaining a low-inventory strategy. There was a strong wait-and-see sentiment, and they were waiting for prices to hit bottom further. While upstream lithium chemical plants still mainly held firm on prices, influenced by factors such as inventory pressure, the willingness to sell for some producers had increased. Due to significant differences in the psychological price levels between buyers and sellers, overall market transactions were sparse, and traders' operations also tended to be cautious. The short-term market might continue to be in the doldrums.

Lithium Hydroxide:

At the beginning of this week, lithium hydroxide prices continued to decline. In terms of market sentiment, most downstream spot demand was low, and the willingness to purchase spot cargo was weak. Upstream, due to high inventory levels and relatively limited sales channels, the attitude of holding firm on prices had loosened compared to the previous period. Coupled with the continuous decline in lithium carbonate prices and the weakening of cost support brought about by the relatively low prices of lithium ore, lithium hydroxide prices were dragged down continuously.

Refined Cobalt:

This week, the spot price of refined cobalt fell slightly. From the supply side, currently, mainstream traders' quotations showed a slight decline. Due to the slightly low profitability of refined cobalt production, the operating rate of smelters remained low, and the supply of refined cobalt decreased slightly. Currently, the market was still digesting social inventory. From the demand side, downstream producers still maintained a just-in-time procurement rhythm, and there was no significant stockpiling. The overall market buying interest was weak. It is expected that this week, the spot price of refined cobalt might continue to fluctuate.

Intermediate Products:

The spot price of cobalt intermediate products tended to stabilize. From the supply side, currently, mainstream mines still maintained a long-term contract supply rhythm and suspended spot cargo shipments. Traders' cargo quotations remained stable at high levels. From the demand side, due to the uncertainty about subsequent policies in the DRC, downstream producers were generally dominated by a wait-and-see sentiment. Additionally, prices of cobalt-related products had declined recently, leading to a decline in downstream buying sentiment. Overall, spot transactions of cobalt intermediate products were slightly mediocre this week. It is expected that next week, the spot price of cobalt intermediate products might remain stable.

Cobalt Salts (Cobalt Sulphate and Cobalt Chloride):

This week, the spot price of cobalt sulphate fell. From the supply side, quotations from mainstream cobalt sulphate smelters showed a slight decline, and quotations from recycling plants fell to a certain extent. From the demand side, given the uncertainty about future policies in the DRC, downstream producers generally held a wait-and-see sentiment. Orders from ternary cathode precursor enterprises did not show significant improvement, while Co3O4 enterprises were still in the process of destocking due to excessive inventory built up previously. Therefore, downstream producers were generally cautious, and their purchase willingness remained low. Spot transactions of cobalt sulphate were extremely mediocre. It is expected that this week, the spot price of cobalt sulphate might 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 firm on prices. However, some producers' willingness to sell at high prices increased, leading to sporadic low-price transactions in the market, forming a temporary suppression on spot prices. On the demand side, downstream enterprises currently had relatively sufficient inventory, and market inquiries were sluggish. The wait-and-see sentiment continued to prevail. It is worth noting that the market's bullish expectations remained highly consistent and had not undergone fundamental changes. Overall, it is expected that next week, the spot price of cobalt chloride will continue to fluctuate at highs, with limited downward adjustment space.

Cobalt Salts (Co3O4):

This week, Co3O4 prices fell sharply. From the supply side, after the holiday, the market was relatively sluggish. Most smelters lowered their quotations, and their willingness to sell increased. Some low-price transactions further pulled down spot prices. From the demand side, LCO cathode producers only maintained necessary procurement and had no intention of hoarding inventory. They generally held a wait-and-see attitude, with reduced acceptance of Co3O4 prices. Market inquiries remained scarce. It is expected that next week, the peak of market procurement has not yet arrived, demand will still be weak, lacking significant upward momentum, and spot prices are expected to continue to decline.

Nickel Sulphate:

On June 9, the SMM battery-grade nickel sulphate index price was 27,597 yuan/mt, and the quotation range for battery-grade nickel sulphate was 27,580-28,050 yuan/mt, with the average price remaining stable WoW. In terms of costs, LME nickel prices fluctuated today. From the demand side, despite signs of a MoM improvement in nickel sulphate demand in June, 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. From the supply side, the order signing situation for nickel sulphate producers in June was poor this week, and some large nickel sulphate enterprises planned to carry out shutdown maintenance in June. Given weak demand coupled with declining costs, some nickel sulphate producers' quotations had shown signs of loosening. Looking ahead, considering the continued sluggish downstream demand and the weakened bargaining power of some buyers, it is expected that nickel sulphate prices might further weaken in the short term.

Ternary Cathode Precursor:

This week, in the ternary cathode precursor market, prices of 5-series, 6-series, and 8-series products continued to decline. From the perspective 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 obvious increase in domestic orders for 6-series products. In contrast, demand for 5-series products was weak, and their market share was 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, with the continuous decline in raw material prices currently, market sentiment turned cautious, and the market gradually entered the destocking phase. Orders for consumer products in June were 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 was still room for further decline 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 had not yet hit bottom and continued 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, despite an increase in overseas demand, as producers had carried out a certain degree of advance stockpiling during the period of rising raw material prices in March and April, facing the current downward trend in raw material prices, the market held a bearish view on cobalt salts and lithium salts. Additionally, as stockpiling for the "618" shopping festival had ended, enterprises generally shifted to destocking operations. In terms of price trends, there was still room for further decline in lithium carbonate, nickel sulphate, and cobalt sulphate prices. Affected by the fluctuations in upstream raw material prices, ternary cathode material prices still had the potential to decline further.

LFP:

This week, LFP prices continued to fall, with an overall decline 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 were generally more active in production this week. Especially affected by the reduction in US tariffs, the recovery of energy storage orders for material plants 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 overseas energy storage market saw active production from downstream battery cell manufacturers, accelerating the pace of strong exports, with relatively full orders.

Iron Phosphate:

In June, the raw material prices of iron phosphate remained stable. Supported by costs, it was difficult for low prices to fall sharply. However, due to fierce market competition, high-priced iron phosphate faced the risk of being replaced. Some enterprises chose to adopt a "volume discount" strategy. Prices were constrained by the tug-of-war between costs and supply and demand. It is expected that prices would continue to fluctuate rangebound, with high-end prices possibly still having a small room for decline, while low and mid-end iron phosphate would maintain stability relying on the cost floor.

LCO Cathode:

The LCO cathode market was relatively stable 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. Prices were under dual downward pressure from the raw material side: battery-grade lithium carbonate prices continued to fluctuate downward, and Co3O4 prices fell unexpectedly before and after the holiday. On the supply side, Co3O4 enterprises currently had relatively high inventory reserves, but the storage period of Co3O4 was short. The willingness to sell from upstream producers increased significantly, and they actively lowered quotations. Terminal manufacturers were in the stage of digesting battery cell inventory, with reduced procurement of cathode materials. LCO cathode producers were relatively cautious in raw material procurement. In the short term, the support from raw material costs continued to weaken, and there was still room for LCO cathode 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 would drive the cobalt industry chain to start a new round of upward cycle.

Anode:

This week, prices of some artificial graphite fell slightly. In terms of supply and demand, with the end of the auto show and the cancellation of mandatory energy storage allocation, the overall market transaction activity was weak, and supply appeared relatively sufficient. On the cost side, due to weak downstream demand, the production cost of anode materials decreased. Therefore, this week, the price of artificial graphite anode materials showed a downward trend. Looking ahead, the cost side might continue to weaken, and the supply side would still be relatively abundant. Therefore, it is expected that the price of artificial graphite anode materials might continue to face downward pressure.
This week, there were no significant fluctuations in either the cost side or the supply-demand balance, 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. For dry-process separators, the mainstream quotations were: 12μm at 0.45 yuan/m² and 16μm at 0.44 yuan/m². In terms of the supply-demand structure, on the supply side, constrained by the long release cycle of industry capacity, the accumulated stockpiled 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 market prices of the core raw materials for electrolytes, including LiPF6, solvents, and additives, remained stable, with no significant changes in the overall manufacturing costs of electrolytes, maintaining a relatively stable cost structure. 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 China has also provided some positive stimulus. Under the influence of multiple factors, downstream customers' production and stockpiling behaviors have become more conservative, generally maintaining a "purchasing as needed" strategy. This cautious operational strategy has resulted in weak growth momentum in market demand, with 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 will 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, with capacity release lagging behind. 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. This week, coefficients for ternary and LCO black mass also continued to decline, with LFP pole piece black mass priced at 2,250-2,400 yuan/mtu and LFP battery black mass at 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, it 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. Currently, procurement in May is expected to 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 with the continuous decline in salt prices, and black mass prices have generally followed the trend of declining salt prices, although the rate of decline is still slower than that of 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 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 are still below the surplus line, especially LFP wet-process plants, which are significantly affected by the decline in lithium salt prices. While the profits of the grinding process are slightly better than those of the wet-process, the profits of the grinding process in some small and medium-sized plants 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, while for 3.44/3.77MWh DC-side battery cabins, it 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 procurement project of energy storage system equipment for the 2 million kW "Power Transmission from Alxa to Urad" regional mutual-aid new energy project were announced. Within the jurisdiction of 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:   

[CPCA's Cui Dongshu: Fully Encourage Market-Oriented Price Competition in the Industry] In response to the latest round of "price wars" in the automotive market, Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), stated that the "price wars" in the automotive market represent long-term price competition. We fully encourage market-oriented price competition in the industry to achieve better quality improvement, efficiency enhancement, and technological innovation. Currently, the price of lithium carbonate is gradually stabilizing, dropping from 600,000 yuan per mt in January 2023 to 80,000 yuan per mt in July 2024, and further to 60,000 yuan per mt this year. Resource prices have significantly decreased, and costs are reasonably declining. Therefore, sales promotions are a relatively normal phenomenon. Price competition in the automotive market has been relatively mild so far this year. We hope to maintain this mild trend, and it is a normal measure to take certain actions against "fixed pricing" behaviors. (Financial News Agency)
[Farasis Energy: Batteries Supplied to a Leading US eVTOL Company Have Entered Phase IV FAA Certification] Farasis Energy stated on an interactive platform that the company has been engaged in the R&D of eVTOL power batteries since 2012, completed sample supply in 2020, achieved mass production and installation of the first-generation products and verification of the second-generation product system in 2022, and assisted the customer in becoming the first eVTOL company to obtain FAA airworthiness certification. Currently, the batteries supplied by the company to a leading US eVTOL company have entered Phase IV certification by the Federal Aviation Administration (FAA) of the US, and the progress is going smoothly. (Financial News Agency)
[General Administration of Customs: China's EV Exports Increased by 19%, Industrial Robot Exports by 55.4% in the First Five Months of This Year] The General Administration of Customs announced that in the first five months of this year, China's exports of equipment manufacturing products reached 6.22 trillion yuan, an increase of 9.2%, accounting for 58.3% of China's total export value. Among them, exports of EVs increased by 19%, construction machinery by 10.7%, ships by 18.9%, and industrial robots by 55.4%. In the first five months, China's equipment manufacturing products contributed 73% to the overall export growth, with the contribution rate reaching as high as 76.9% in May, providing strong support for the stable growth of foreign trade.

SMM New Energy Research Team

Wang Cong 021-51666838

Ma Rui 021-51595780

Lin Ziya 86-2151666902

Feng Disheng 021-51666714

Lü 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