Lithium, cobalt prices fall further on week amid cautious sentiment

SHANGHAI, Jul 15 (SMM) – SMM retains its outlook that lower demand from the power battery market will depress production of ternary materials in the third quarter. Prices of lithium salts will extend their declines and premiums of cobalt metal over cobalt salts prices will wane in a falling market.  

Prices of refined cobalt extended their weak performance last week as the new energy sector enters a downturn amid subsidy cuts. Sluggish trades pushed domestic producers to lower offers, and there is further downside room expected in the weeks ahead. Trades of cobalt hydroxide also remained few as current offers sidelined consumers. 

SMM assessed prices of refined cobalt at 215,000-227,000 yuan/mt in the week to Friday July 12, down an average 5,500 yuan/mt from the previous week. Prices of cobalt hydroxide stood at $8.2-8.4/lb, down an average $0.1/lb.

Poor downstream demand and cautious sentiment continued to lower prices of cobalt salts last week. Some producers of cobalt sulphate held offers stable at 35,000 yuan/mt but cash-in demand drove some mills to cut offers, which dragged on the average price in the market. 

Prices of cobalt sulphate came in at 35,000-37,000 yuan/mt, down an average 1,000 yuan/mt on the week, and prices of cobalt chloride also slid an average 1,000 yuan/mt, to stand at 42,000-44,000 yuan/mt, according to SMM assessment. Prices of nickel sulphate remained unchanged on the week, standing at 22,500- 26,000 yuan/mt.

Prices of cobalt (II, III) oxide fell significantly in a buyers’ market, but major producers were still unwilling to reduce prices below the 150,000 yuan/mt level. SMM assessed prices of cobalt (II, III) oxide at 152,000-154,000 yuan/mt, down an average 4,000 yuan/mt on the week with further downward room in the short term. 

Prices of ternary precursor stemmed decline as prices of cobalt, nickel raw materials only limitedly fell last week. 

In the week to Friday July 12, prices of both NCM523 and NCM622 held flat on the week, to stand at 70,000-72,000 yuan/mt and 76,000-78,000 yuan/mt, respectively.

Considerably weaker demand for battery-grade lithium carbonate continued to prompt producers to slash offers. Downstream producers of cathode materials demanded prices of 70,000-71,000 yuan/mt for battery-grade lithium carbonate with spodumene ore as raw materials, and 71,000-73,000 yuan/mt for products with spodumene concentrate as feedstock. 

Weaker consumption for battery-grade lithium carbonate also depressed demand for industrial-grade lithium carbonate. Sellers of industrial-grade lithium carbonate with a grade above 99.2% but excessive impurities lower offers to 60,000 yuan/mt last week. 

SMM assessed prices of battery-grade lithium carbonate at 70,000-73,000 yuan/mt, down an average 1,000 yuan/mt on the week, and prices of industrial-grade lithium carbonate at 62,000-65,000 yuan/mt, down 1,500 yuan/mt week on week.

Last week, prices of battery-grade lithium hydroxide continued to trend downwards. A producer of lithium hydroxide told SMM that purchases by downstream consumers weakened significantly. Limited storage period for the product may push producers to cut production in July. 

As of Friday July 12, prices of battery-grade lithium hydroxide (coarse particle) shrank an average 2,000 yuan/mt on the week, to stand at 79,000-81,000 yuan/mt, SMM assessed.

Expectations of further downside room in prices of cobalt, lithium products held consumers from purchasing and depressed prices of lithium cobalt oxide (LCO). Pressure from lower demand will be gradually felt on the raw materials end, and producers of LCO are expected to accelerate the turnover of finished products to improve cash flows. 

SMM assessed prices of LCO used to produce 4.35V batteries at 193,000-203,000 yuan/mt, down an average 7,000 yuan/mt from the previous week.

Production cuts across power battery producers continued to impact the ternary materials market last week. Some producers of ternary materials reported improved orders in July, but will prioritise destocking in order to ensure cash flow. 

SMM assessed that prices of NCM523 materials held stable at 125,000-133,000 yuan/mt last week, and prices of NCM 622 also limitedly changed at 141,000-148,000 yuan/mt.

Prices of LFP stood unchanged last week. Downstream consumption failed to pick up and LFP producers kept their operating rates at lows. 

In the week to Friday July 12, prices of LFP used in power batteries stood at 46,000-49,000 yuan/mt, flat from the previous week, SMM assessed.

Prices for lithium manganese oxide (LMO) held mostly stable last week with prices of LMO used in motive batteries edging lower amid a slow season in the digital sector. 

SMM assessed prices of LMO, used in high-energy-density lithium-ion batteries, remained flat on the week at 30,000-38,000 yuan/mt, and prices of LMO used in motive batteries stood fell an average 500 yuan/mt on the week, to 47,000-49,000 yuan/mt.

Data from the China Association of Automobile Manufacturers (CAAM) showed that domestic production, sales of new energy vehicles (NEVs) maintained their growth in June, driven by the deadline of the grace period for NEV subsidy cuts in late-June. 

China’s production of NEVs expanded 19.4% on the month and 56.3% on the year to stand at 134,000 units in June, and sales rose 45.6% from May and 80% from June 2018, to 152,000 units, according to CAAM data. 

Industrial data showed that domestic production of power batteries shrank 35.7% from May to stand at 6.4GWh in June. Production of ternary batteries slid 29.5% on the month, standing at 4.5GWh, and accounted for 71.2% of the total output of power batteries. Production of lithium iron phosphate (LFP) batteries, taking up 26.5% of the total output, declined 27.3% from May and posted 1.7GWh. 

Production of power batteries amounted to 43.4GWh in the first half of the year, with ternary batteries accounting for 63.2%, LFP batteries taking up 32.0%, and other batteries 4.8%. 

According to SMM database, domestic installed capacity of power batteries stood at 6.61GWh in June, up 16.3% from May and up 126.6% from June 2018. Installed capacity of ternary batteries accounted for 71.2% of the total, up 5.2 percentage points on the month, with that of LFP batteries took up 25.9%, down 4.5 percentage points. 

SMM learned that battery producers will focus on destocking and upgrade in July as greater production in the first quarter lifted inventories.