Market analysis of ternary precursor in 2023

Price perspective. Looking back at 2023, the overall trend of ternary precursor prices showed a downward trend. The average price of ternary precursor 523 in 2023 was 82,000 yuan, a 34% decrease from 2022. As of the present, the average price is 69,000 yuan. Against the backdrop of overcapacity, the ternary precursor is mainly affected by the cost of nickel and cobalt salts.

Looking back at two significant rebounds in 2023:

1. The upward trend in prices in the second quarter was due to substantial market demand in June and the fact that downstream nickel and cobalt salts also saw price increases due to low inventory levels and the need to replenish supplies. The cost increases were successfully passed on under the backdrop of increased demand.

2. The upward trend at the end of the third quarter was due to a slight increase in nickel and cobalt prices, driven by the rebound in terminal demand and short-term structural mismatch in cost support on the raw materials side. Looking ahead to the price in 2024: (1) Nickel sulfate remains the determining factor for ternary precursor prices. Due to the expected further penetration of medium-to-high nickel materials in ternary materials/ternary precursors, there will be a linked increase in demand for nickel sulfate in 2024.

Nickel sulfate will still be the determining factor for ternary precursor prices, and with some manufacturers making concessions on the raw materials side, the profit of nickel hydroxide or precursor will shrink in 2024. The cost position will become an important factor in the price of nickel sulfate. Currently, the market still expects an oversupply of nickel sulfate in 2024, but in the short term, there may be rebounds in nickel salts due to temporary tightness in raw materials and structural supply-demand mismatches, driving a small recovery in precursor prices. In the face of intense competition in the terminal market, the cost reduction requirements from Japanese and South Korean battery factories are increasing, putting pressure on the overseas selling price of precursors.

In 2023, about 30% of China's total production of ternary precursors were exported overseas, mainly to Japanese and South Korean battery factories. According to relevant data, in January of this year, CATL's global installed capacity accounted for 26% of the market share, a year-on-year increase of 28.5%. LG ranked second. With intense competition among terminal battery factories, overseas battery factories may anchor the pricing of raw materials to CATL, leading to a lower acceptance of premiums for precursors, and narrowing overseas selling prices and profits for precursors.