【SMM cobalt-lithium morning meeting minutes】Lepidolite prices remain stable, lithium ore spot circulation is relatively tight

Lithium Ore:

With the trend of a slight increase in the price of lithium carbonate, the price of Lepidolite remained stable on Monday. However, some lithium salt plants in Jiangxi are still hesitating to ship their products due to cost considerations, and coupled with pessimistic sentiment towards the future price trend of lithium carbonate, the demand for Lepidolite has decreased. It is expected that the supply and demand in the Lepidolite market will remain oversupplied in the short term, with prices mainly maintaining stability and having a slight downside potential.

The price of spodumene increased slightly on Monday, and the slight increase in the price of lithium carbonate today has had a certain pullback effect on the price of spodumene. Currently, the spot market circulation remains relatively tight, with some lithium salt plants with insufficient inventories seeking spot goods to fulfill long-term orders, while some leading lithium salt plants with adequate inventories have no immediate purchasing demand, leading to small fluctuations in spodumene prices. It is expected that the spot market circulation of lithium mines will remain tight in the short term, and the price of spodumene will remain stable.

Lithium Carbonate:

The price of lithium carbonate increased slightly on Monday. The spot trading of lithium carbonate in the market today was relatively sluggish. Some upstream lithium salt plants, considering their own costs and finished product inventories, still maintain their previous sales strategies, keeping their quotations for spot orders at a high level in the market. Some sellers also did not further reduce their quotations based on today's market sentiment. Some downstream buyers reported that the market and trader quotations they received today had increased, but considering their large inventories, long-term orders, and large customer supply coverage, there were no significant purchases or replenishments today. Additionally, some downstream players expect prices to weaken in the future and are currently maintaining a wait-and-see attitude.

Lithium Hydroxide:

The price of lithium hydroxide declined this week. Recently, the trading volume in the lithium hydroxide market has been relatively sluggish. As some downstream battery cell manufacturers have gradually entered the inventory reduction cycle, this trend has gradually spread upstream to the cathode segment. With long-term agreements signed and adequate supply of raw materials, as well as the downward trends in both carbon and lithium prices, some cathode manufacturers currently have a negative buying intention. Meanwhile, some smelters are also facing certain pressure to sell their products. Both long-term and spot prices have seen adjustments, leading to a decline in the market's transaction focus.

Cobalt Intermediates:

Cobalt intermediate prices remained stagnant this week. From the supply side, there is an adequate supply of goods at domestic ports, and the available spot goods are relatively concentrated. On the demand side, some raw material demand exists in the cobalt metal segment due to high operating rates. However, from an overall market perspective, the psychological price gap between upstream and downstream is currently significant, resulting in a stalemate in spot prices.

Cobalt Salts (Cobalt Sulfate and Cobalt Chloride):

Cobalt salt prices continued to decline this week. From the supply side, production has decreased due to cost inversion and weak demand. On the downstream demand side, production reductions in precursors and cobalt tetroxide have led to a decrease in cobalt demand. Given the persistent downtrend in cobalt salt prices, terminal direct procurement demand has been cautious. Only some traders have engaged in low-price buying opportunities. Overall, due to weak demand, some enterprises have resorted to over-selling to promote transactions, accelerating the decline in cobalt salt prices.

Cobalt Salts (Cobalt Tetroxide):

Cobalt tetroxide prices experienced a slight drop this week. From the supply side, production has declined due to weak demand. On the downstream demand side, lithium cobalt oxide production has declined, and demand has weakened. Given the low demand for market circulation, spot prices are difficult to sustain.

Nickel Sulfate:

Nickel sulfate prices continued to rise slightly this week. There are two main factors limiting its growth: 1. Tight supply of raw materials; 2. Profit inversion, which has led to the overall supply of nickel salts falling short of expectations. Orders for precursors have decreased. Additionally, leading manufacturers have completed their nickel raw material procurement for May, coupled with the arrival of Indonesian nickel sulfate, leading to a gradual weakening of demand. The current market is experiencing a double weakness in supply and demand, but due to the high price of nickel and the sustained price support of MHP, salt plants have regained their willingness to maintain prices. Therefore, during the period of salt plant inventory accumulation, cost-driven increases have pushed up nickel salt prices. Looking forward, high nickel prices are expected to prevent a short-term decline in nickel salts, and the overall price of nickel salts is under pressure from weakening demand.

Ternary Precursors:

Ternary precursor prices rose slightly this week. On the supply side, affected by the difficulty in purchasing nickel salt spot goods, precursor enterprises continue to maintain a state of securing supplies for their major customers. On the demand side, spot transaction activity is relatively stable compared to before, and some small factories still choose to partially outsource production when facing losses in their own precursor production. For long-term contracts, downstream customers have reduced their pickup volumes. From the cost perspective, the price of nickel salt has increased, while cobalt salt prices remain stable, leading to an overall increase in production costs. It is expected that the price of ternary precursors will remain stable in the short term, as the cost support from high nickel salt prices remains strong, and any further increases in nickel salt prices may drive a slight rebound in precursor prices. However, overall demand remains weak.

Ternary Materials:

Ternary material prices rose this week. On the cost side, the rebound in lithium and nickel prices has driven up the cost of ternary materials. From the supply side, some material manufacturers have further reduced their production schedules recently, with declines in all 5, 6, and 8 series materials. Additionally, due to the rapid decline in lithium prices, some material manufacturers are facing increased inventory pressure, resulting in output being less than shipments. On the demand side, in the power battery market, battery cell manufacturers have seen a decline in demand for ternary materials in May due to considerations of their own finished product and material inventories. It is expected that ternary material prices will remain stable in the future.

Lithium Iron Phosphate (LFP):

Recently, lithium iron phosphate prices have declined, mainly due to a significant drop in lithium carbonate prices. The trend in LFP prices closely follows the fluctuation of raw material prices, and there has been no significant adjustment in processing fees recently. Some battery cell manufacturers are currently bidding for LFP supply for the second half of the year or planning to start bidding by the end of May. High-quality LFP products from leading manufacturers can achieve processing fees of around 18,000 yuan, while ordinary products have processing fees of around 16,000 yuan. There is a significant difference in processing fees due to different product performance, leading to a severe polarization in the LFP market.

Iron Phosphate:

This week, phosphate prices remained stable on the raw material side, while industrial ammonium phosphate saw a significant increase. Both phosphorus sources are currently in tight supply. The reason for the rise in industrial ammonium phosphate prices is due to insufficient inventory preparation for water-soluble fertilizers in Xinjiang in the early stage, increased demand in May, high fertilizer export demand, and a recovery in demand from the new energy market in April and May. As demand increases and supply remains tight, the price of industrial ammonium phosphate has risen recently, and currently, iron phosphate enterprises may face insufficient supply of raw materials for procuring industrial ammonium phosphate. However, the price of iron phosphate has not seen a significant increase, still constrained by the cost of lithium iron phosphate. It is expected that iron phosphate prices will not rise significantly in the future, and the current loss situation for iron phosphate enterprises is unlikely to change.

Lithium Cobalt Oxide:

Lithium cobalt oxide prices remained stable this week. On the cost side, the cobalt market trading was sluggish, and the price of cobalt tetroxide declined, leading to a corresponding drop in lithium cobalt oxide prices. In the market, due to the decline in raw material prices, some enterprises quoted lower prices to varying degrees this week. On the supply side, lithium cobalt oxide supply increased slightly in May. Competition among manufacturers in the existing market remains fierce, and some manufacturers have resorted to reducing prices to increase sales. It is expected that cobalt tetroxide prices will continue to decline, and lithium cobalt oxide prices are expected to remain weak.

Anode Materials:

Anode material prices remained weak this week. On the cost side, some low-sulfur petroleum coke manufacturers implemented a price protection policy, and subsequent prices are expected to decrease slightly. Oil-based needle coke producers are mainly fulfilling May orders at present, and prices are stable. Many producers are watching the demand situation for anode materials in June and expect prices to continue to rise. Currently, Sichuan has entered the flat water season, and electricity prices have decreased, leading to increased operations in graphitization outsourcing companies. However, newly restarted enterprises have lower outsourcing prices, and it is expected that the overall market will remain weak in the future. On the demand side, downstream demand continues to grow, driving an increase in anode production. However, current anode capacity is still oversupplied, and industry competition is fierce. Additionally, strong demand for cost reduction from downstream price wars continues to spread upward, making it difficult for anode material prices to rebound and remaining low and weak.

Separators:

Separator prices stabilized this week. Recently, separator prices have remained weak and stable. Some small and medium-sized battery cell manufacturers have slowed down their separator procurement and pickup pace due to nearly completed mid-year stockpiling for downstream markets, leading to weaker downstream orders. However, many battery cell manufacturers are still in the process of increasing production for the dynamic and storage markets in the middle of the year, and the overall rigid demand for separators remains high. Therefore, prices are expected to remain stable in the short term.

Electrolyte:

The market price of electrolytes remained temporarily stable this week. On the supply side, electrolyte manufacturers continued to maintain a high operating rate, producing according to sales. From the demand perspective, the power storage market continued to show high demand, and major battery cell manufacturers maintained high production plans, which also led to a high level of procurement demand for electrolytes. On the cost side, the recent decline in lithium carbonate prices has driven down the price of lithium hexafluorophosphate, weakening the support for the production cost of electrolytes. Under the dual influence of declining electrolyte costs and strong demand, it is expected that the market price of electrolytes will remain stagnant in the short term, without significant fluctuations.

Sodium-ion Battery:

The sodium-ion battery market was relatively stable this week. The prices of precursors and four main materials were stable, and there was still room for further decline in actual purchase prices. Currently, the four main materials are actively promoting the verification of multiple combinations of cell products. Downstream sodium-ion battery cell manufacturers generally purchase raw materials based on order needs, apart from materials for research and development validation. The two-wheeled vehicle and energy storage markets primarily focus on customized materials, and there is a high level of activity in the start-stop power supply segment. The supply, demand, and prices of the sodium-ion battery industry remain stable in the short term.

Recycling:

This week, the prices of ternary black powder coefficients, lithium iron phosphate lithium points, and lithium cobalt oxide black powder coefficients remained stable. On the demand side, lithium carbonate and nickel sulfate prices were relatively strong, while cobalt sulfate prices remained flat. Some grinding plants have a slight expectation of increasing the discount coefficient, but many self-sufficient lithium iron phosphate wet plants have chosen to stop production due to severe mismatches between scrap prices and costs in the earlier period. Even after price declines, lithium iron phosphate scrap still faces mismatches, resulting in low acceptance of scrap materials and a wait-and-see attitude towards the future market. Ternary wet plants have gradually increased the proportion of using other raw materials such as nickel-cobalt slag and yellow slag from April to May. With the decline in cobalt and lithium salts, they have a pessimistic expectation for future salt prices. On the supply side, pricing power still mainly lies in upstream traders. However, with the decline in salt prices, some traders and grinding plants have slightly eased their high pricing sentiment. As most wet plants expect purchasing prices to remain below market prices and have a further decline expectation for future prices, the volume of scrap transactions is relatively low. It is expected that scrap prices will continue to fluctuate slightly along with the oscillation of salt prices in the short term.

Downstream and Terminal Markets:

[U.S. Increases Tariffs on Automobiles, Batteries, and Key Minerals]

The tariff rate on electric vehicles under Section 301 will increase from 25% to 100% by 2024. For batteries, battery components and parts, and key minerals, the tariff rate on lithium-ion batteries for electric vehicles will increase from 7.5% to 25% in 2024. In 2026, the tariff rate on lithium-ion batteries for non-electric vehicles will increase from 7.5% to 25%. In 2024, the tariff rate on battery components will increase from 7.5% to 25%. The tariff rate on natural graphite and permanent magnets will increase from zero to 25% by 2026. The tariff rates on certain other key minerals will increase from zero to 25% in 2024.

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