[SMM Cobalt and Lithium Morning Meeting Summary] The trend of LCO is stable, with new enterprises impacting the market with low prices while old enterprises maintain quality and stability

Lithium Ore:

This week, lithium ore prices showed a significant increase WoW, mainly due to the slight recovery in lithium carbonate prices. On the supply side, overseas mines continued to hold firm on their prices. Suppliers took the opportunity to raise prices as lithium carbonate prices rose, leading to an overall increase in market quotations. On the demand side, the current lithium chemical prices provided hedging space for traders and lithium chemical plants, with their psychological acceptance levels rising, causing the lower end of market prices to rebound. As lithium chemicals and lithium ore prices rise, the willingness to inquire and transact on the demand side is slightly better than before. It is expected that in the short term, lithium ore prices will be more likely to rise than fall.

Lithium Carbonate:

This week, spot lithium carbonate prices showed a stabilizing and recovering trend. The SMM battery-grade lithium carbonate index price increased from 61,393 yuan/mt to 62,054 yuan/mt, with a rise of about 650 yuan/mt. The price increase was mainly driven by improved demand expectations for July and support from some rigid procurement orders, along with irrational effects caused by unverified market rumors. The market remains in a state of "upstream holding firm on prices, downstream pressing down on prices."
On the supply side, there is ample availability of circulating lithium carbonate, but industry inventory pressure has not been effectively alleviated, and smelters maintain high quotations. However, cathode material plants still primarily make just-in-time procurements, with no significant increase in restocking willingness, resulting in sluggish overall market transactions. Although there are expectations for increased production schedules in July, the actual recovery situation still needs to be observed, and the wait-and-see sentiment remains strong. If the cathode material plants' production schedules increase as expected in July, it may provide further support for prices; otherwise, inventory pressure may again suppress the upside room for prices. Overall, the lithium carbonate market remains in a state of supply surplus, and in the short term, it is expected to maintain a fluctuating trend.

Lithium Hydroxide:

This week, the decline in lithium hydroxide prices slowed down WoW. In terms of production, most enterprises produce based on sales, following normal production schedules. Market sentiment sees continuous downward pressure on prices from the downstream. However, upstream, the recovery in lithium carbonate and lithium ore prices has strengthened cost support, and the reluctance to budge on prices during transactions has intensified, slowing the pace of the price decline. It is expected that in the short term, the downside room for lithium hydroxide prices will be relatively limited.

Refined Cobalt:

This week, the low-end refined cobalt prices rose slightly, while the high-end prices remained stable. On the supply side, refined cobalt smelters maintained long-term contract supplies, with few spot orders. Traders have few low-priced goods left, and low-end quotes were raised. Some traders reported that a high-end brand's ex-factory price was increased, and traders followed suit in holding firm on prices. However, due to weak purchase willingness from the downstream, the market transaction prices gradually returned below the producers' ex-factory prices. On the demand side, as the social inventory of refined cobalt remains high and downstream demand has not significantly improved, most downstream enterprises continue to follow a just-in-time procurement rhythm, with actual transactions remaining sluggish. It is expected that in the short term, refined cobalt prices will continue to maintain a fluctuating trend.

Intermediate Products:

This week, the spot prices of cobalt intermediate products continued to maintain an upward trend. On the supply side, a miner announced force majeure this week, further enhancing the bullish sentiment among miners and traders. Most enterprises suspended quotations, while a few that did quote further increased their prices. On the demand side, smelters face challenges such as production costs being in losses and weak downstream demand. Under the unclear future situation, they temporarily halted purchases and mainly consumed their own inventories. Some smelters with low inventories attempted to inquire in the market, but due to significant price discrepancies between buyers and sellers, actual transactions remain difficult. Overall, influenced by the DRC's policy extension, China's cobalt intermediate products will continue to face raw material shortages, providing upward momentum for prices. However, attention should be paid to the potential suppression of downstream demand due to rising raw material prices.

Cobalt Salts (Cobalt Sulphate and Cobalt Chloride):

This week, cobalt sulphate prices maintained a fluctuating trend. On the supply side, a miner announced force majeure, and most smelters and traders further raised their new goods' quotations. Some smelters and traders reported that older, lower-priced goods were traded in the market. On the demand side, orders from downstream ternary and LCO enterprises have not seen significant improvement, and they are currently observing the market and mainly digesting previous inventories. Refined cobalt purchases were paused due to poor economic viability. Overall, under the current uncertain situation, there is a large price discrepancy between buyers and sellers, with the upstream insisting on holding firm on prices and the downstream showing weak purchase willingness, resulting in limited actual transactions. It is expected that next week, cobalt sulphate prices will continue to fluctuate, awaiting feedback from actual market transactions.

Current cobalt chloride enterprise quotes are 61,000-63,000 yuan/mt, with the market being rather sluggish and only a few transactions. On the supply side, smelters are still cautious, with few market transactions. On the demand side, downstream enterprises have relatively sufficient inventory levels, actively inquiring but remaining cautious about transactions. In terms of prices, although upstream smelters quote higher, the actual transaction price is still around 6.1, with 6.2 transactions being rare. It is expected that in the short term, cobalt chloride prices will stabilize within the 6.1-6.2 price range.

Cobalt Salts (Co3O4):

Current Co3O4 enterprise quotes are 200,000-220,000 yuan/mt, with both upstream and downstream maintaining a wait-and-see attitude, and few actual transactions, mostly long-term contract deliveries. On the supply side, Co3O4 plants are observing the overall market sentiment and demand, with only a small amount of shipments. On the demand side, LCO cathode plants have relatively low inventories, but the overall market is heavily influenced by sentiment, leading them to adopt a wait-and-see approach. In terms of prices, Co3O4 plants expect to sell at 210,000-220,000 yuan/mt, but high-priced Co3O4 transactions remain few. In the long run, Co3O4 prices are still influenced by cobalt inventory, and whether the current industry inventory can support until December is key to the price trend.

Nickel Sulphate:

As of Thursday this week, the SMM battery-grade nickel sulphate index price was 27,194/mt, with the quotation range for battery-grade nickel sulphate at 27,200-27,600 yuan/mt, and the average price remained stable compared to last week. From the demand side, downstream precursor plants have sufficient nickel salt inventories, and the overall market inquiry and transaction sentiment was weak this week. Due to weak demand, nickel salt plants' acceptance of nickel salt prices has not improved. On the supply side, affected by high raw material costs and weak demand, some nickel salt plants plan to cut or halt production. The overall upstream selling sentiment also remained weak. Looking ahead, given the continuously weak downstream demand and weak upstream selling sentiment, it is expected that nickel salt prices will remain stable in the short term.

Ternary Precursor:

This week, ternary precursor prices increased slightly. In terms of raw material costs, nickel sulphate and manganese sulphate prices remained relatively stable, while cobalt sulphate prices rose, driving up the absolute price of precursors. The current discount coefficient for spot orders has not changed significantly. The overall demand in the ternary market remains mediocre, lacking solid support for price increases. Downstream battery cell manufacturers still hold the power over the discount coefficient, showing a weak response to the rise in cobalt sulphate prices, and the overall discount strategy remains stable, with long-term contract discounts expected to remain unchanged in the short term. In terms of demand, the domestic NEV market saw a slight increase in demand for 6-series products, and the overseas market saw a small increase in demand for 8-series products, but overall orders are concentrated among top-tier enterprises. The consumer market continues to be sluggish. On the supply side, as the market enters the restocking phase in July, overall production schedules are expected to increase.

Ternary Cathode Material:

This week, 5-series ternary cathode material prices increased, while 6-series and 8-series product prices saw a slight correction. In terms of raw materials, nickel sulphate and manganese sulphate prices were basically flat, while cobalt sulphate and lithium carbonate prices rose, and lithium hydroxide continued to decline. 5-series products received some cost support, driving up their absolute prices. However, due to weak market demand and the dominant position of battery cell manufacturers in pricing negotiations, ternary cathode material prices lack the room for a significant increase. Downstream battery cell manufacturers showed a lukewarm response to the rise in cobalt sulphate prices, and the discount coefficient is expected to remain stable. In terms of demand, some new car models in the NEV market led to moderate stockpiling, with orders concentrated among top-tier battery cell manufacturers. Overseas battery cell manufacturers experienced some order shifts, affecting orders for cathode materials. The consumer market is in the traditional off-season, with recent orders being mediocre. On the supply side, as the market enters the restocking phase in July, the overall production of ternary cathode materials is expected to increase slightly.

LFP:

This week, LFP prices continued the growth trend from last week, with an overall increase of about 210 yuan/mt. Lithium carbonate prices continued to rise this week, with a cumulative increase of about 950 yuan/mt. In the market, material plants' overall production was relatively stable this week, with top-tier enterprises showing a slight increase in production. Downstream demand is expected to see some growth this month. However, market demand is beginning to diverge, with NEV orders expected to decrease this month, while ESS demand is performing well, driving overall demand growth. Recently, a battery cell manufacturer started a tender, and the overall tender progress was relatively smooth. Based on the information available, it is expected that the price war will intensify in H2. Overall, the recent LFP market mainly revolves around tenders, with mediocre demand and relatively stable market conditions.

Iron Phosphate:

This week, the iron phosphate market remained stable, with no significant fluctuations even though it has entered H2. Some companies that adjusted prices in June have slowed down the pace of price reductions in July. The reason is that new entrants often use low-price strategies to capture the market, and even if established companies reduce prices, their discounts are hard to match those of new entrants, and sustained low prices could lead to greater losses. Companies that previously had low sales, while still actively seeking orders, are now holding firm on their price bottom lines and focusing on improving product competitiveness to secure market share. The current market is characterized by a significant game: new companies using price as a spear to attack the market, and old companies using quality as a shield to defend. Both sides seek a dynamic balance in the price tug-of-war, and in the short term, the iron phosphate market is expected to continue this steady and defensive trend.

LCO:

Recently, LCO prices have seen a significant increase due to changes in raw material costs: Battery-grade lithium carbonate prices continued to rise, and Co3O4 prices, influenced by DRC policies, showed a strong inclination to increase. On the supply side, Co3O4 enterprises quoted high prices, and LCO cathode plants showed low willingness to purchase at these high prices. On the demand side, terminal demand is entering the off-season, leading to a decrease in LCO demand. Overall, LCO prices are expected to rise significantly with the increase in Co3O4 and lithium carbonate prices.

Anode:

This week, artificial graphite anode material prices stopped falling and stabilized. On the demand side, the slowdown in automaker production led to weak growth in power battery cell demand, but the slight recovery in small storage market demand partially offset the power market's demand gap. This change was transmitted upstream, keeping the overall demand for anode materials from battery cell manufacturers relatively stable. On the supply side, the supply remained abundant. On the cost side, as anode and traditional industries restocked, anode raw material costs stopped falling and rebounded, providing support for artificial graphite prices. With multiple factors at play, artificial graphite anode material prices entered a stalemate this week. Looking ahead, although the overcapacity situation is unlikely to change in the short term, related raw material prices are expected to stabilize, supporting anode material prices to gradually enter a stable operating phase.
This week, supported by stable supply-demand and cost conditions, natural graphite anode material prices remained stable. Looking ahead, with accelerated innovation in artificial graphite anode technology and gradual capacity expansion of vapor deposition silicon-carbon producers, downstream customers are increasingly favoring alternative materials due to dual demands for cost reduction and performance upgrades. This trend directly squeezes the market demand space for natural graphite anode. Considering supply-demand dynamics and technological iterations, natural graphite anode material prices are expected to remain under pressure.

Separator:

Separator prices remained generally stable this week.Details: wet-process separator mainstream quotations were 1.35 yuan/m² for 5μm, 0.76 yuan/m² for 7μm, and 0.74 yuan/m² for 9μm. Dry-process separator mainstream quotations were 0.45 yuan/m² for 12μm and 0.44 yuan/m² for 16μm. Supply side, constrained by prolonged capacity release cycles, previously accumulated capacity remains undigested, maintaining a supply surplus. Demand side showed structural divergence: NEV market demand fell short of expectations while ESS sector demand exceeded market forecasts, resulting in slight MoM growth overall. Given current supply-demand balance, separator prices are expected to maintain stable trends with limited fluctuations.

Electrolyte

Electrolyte prices held steady this week.Cost side, core raw material LiPF6 prices saw minor declines while solvents and additives remained stable, maintaining relatively stable cost structures. Demand side, the NEV market remained in inventory digestion phase with reduced production schedules, leading to slight WoW demand decline for power batteries. ESS market performed strongly with sustained overseas demand growth. Overall demand growth was modest. Supply side, electrolyte producers continued "produce based on sales" models. Amid structural overcapacity, market competition pressure remained significant. Multiple factors suggest electrolyte prices will continue fluctuating rangebound.

Sodium-ion battery:

The sodium-ion battery market showed positive trends this week. NFPP maintained its dominant position in cathode materials with technological and cost advantages, enjoying robust order demand amid continued price declines.In contrast, layered oxide shipments decreased significantly YoY. Despite occasional low-price sales, constrained by cost bottlenecks, prices stabilized for layered oxide battery cells. As sodium-ion battery industry scales up, defective product issues become prominent. Establishing efficient, environmental protection recycling systems for defective products may become key to sustainable development, drawing industry attention.

Recycling:

Following DRC's import/export restrictions last week, cobalt sulphate prices continued rising but with limited upside due to weak short-term demand support.Nickel sulphate prices remained basically stable while lithium carbonate prices rebounded slightly with oscillating trends. Ternary and LCO black mass coefficients stayed flat. Currently, LFP pole piece black mass lithium points were 2,150-2,300 yuan/mtu, LFP battery black mass lithium points were 1,950-2,100 yuan/mtu. Taking ternary black mass as example: ternary pole piece black mass nickel-cobalt coefficient was 72-74%, lithium coefficient 66-70%. Ternary battery black mass nickel-cobalt coefficient was 70-72%, prices basically flat WoW. Ternary wet-process demand side, most plants maintained stable procurement volumes this month, only consuming basic inventory. With pessimistic lithium chemical price outlooks, black mass purchases remained cautious, keeping market transactions sluggish. LFP wet-process demand side, most plants operated at half capacity with partial toll processing and no external purchases. Supply side, grinding mills and traders showed looser selling price sentiment following salt price declines. Black mass prices continued falling with salt prices, maintaining sluggish transactions. Cost side, except leading integrated wet-process plants, most operators remained below breakeven, especially LFP plants heavily impacted by lithium price drops. Grinding mill profits slightly outperformed wet-process but some small-medium plants faced sustained losses.

Downstream and end-user:

DC-side battery cabin prices declined slightly this week.Average prices were 0.428 yuan/Wh for 5MWh DC-side battery cabins, 0.437 yuan/Wh for 3.44/3.77MWh units. Stimulated by provincial subsidy policies, ESS integrators saw shipment increases in certain regions. However, end-users remained cautious pending full implementation of provincial power mechanisms, prompting integrators to slightly lower prices to compete for existing orders. SMM expects DC-side battery cabin prices may continue slight downward trends.

On June 30, the 2 million kW "A Power to U" regional mutual aid new energy project ESS equipment procurement bid results were announced. The project, to be built in Alxa High-tech Industrial Development Zone, Inner Mongolia, has total capacity of 300MW/600MWh. The bid winner's offer was 276 million yuan, equivalent to 0.46 yuan/Wh.

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SMM New Energy Research Team

Cong Wang 021-51666838

Rui Ma 021-51595780

Ziya Lin 86-2151666902

Disheng Feng 021-51666714

Yanlin Lyu 021-20707875

Zhicheng Zhou 021-51666711

Zihan Wang 021-51666914

Jie Wang 021-51595902

He Zhang 021-20707850

Haohan Zhang 021-51666752

Bolin Chen 021-51666836

Mengqi Xu 021-20707868