Analysis of Cobalt Lithium New Energy Market and Price Cycle

Analysis of Cobalt Lithium New Energy Market and Price Cycle China Lithium Products Technology Co., Ltd report 

Lithium ore:

This week, lithium ore prices have significantly increased due to the sharp rise in lithium carbonate prices. The supply side and overseas mines have strong pricing sentiment, and the current quotation is above CIF SC6 820 US dollars/ton; On the demand side, due to the soaring price of lithium carbonate futures, there is a certain margin for hedging profits, which has led to an increase in the acceptable mineral prices for lithium salt factories and traders, driving up market prices. However, from the perspective of receiving goods, due to the rapid fluctuations in market prices, most demand sides are in a wait-and-see state, and spot transactions are relatively flat.

Lithium carbonate:

This week, the lithium carbonate market has shown a significant increase. The average price of battery grade lithium carbonate increased from 68000 yuan/ton at the beginning of the week to 705500 yuan/ton; The average price of industrial grade lithium carbonate has increased from 66350 yuan/ton to 68900 yuan/ton. This round of market volatility is mainly driven by the funding situation. The news of supply disturbance in Jiangxi mines stimulated an 8% surge in futures prices during trading, but there is currently no significant gap in actual supply and demand. Spot market transactions are mostly concentrated in the trading sector, and positive electrode material factories have a low acceptance of high priced spot goods, only maintaining rigid procurement. The current rapid price increase has detached from fundamental support, and the price divergence between upstream and downstream has intensified. Some material factories have returned to a wait-and-see approach after completing inventory replenishment during the price correction phase. Call on all parties to view short-term fluctuations rationally and pay attention to actual changes in supply and demand.

Lithium hydroxide:

This week, the price of lithium hydroxide has increased significantly compared to last week, with an average price increase of 3100 yuan/ton compared to last Thursday. Due to the significant fluctuations in lithium carbonate futures prices, there has been a significant change in the trading sentiment of lithium hydroxide upstream and downstream compared to the previous period. The willingness of the supply side to raise prices is clear, and there is a strong reluctance to sell, with individual quotes jumping along with lithium carbonate futures prices; On the demand side, some ternary material factories have a certain willingness to purchase for essential needs, and the acceptable prices are forced to rise synchronously, resulting in an increase in market prices. At the current carbon hydrogen price differential, carbonization is on the edge of the cost line, and traders may have a certain willingness to carbonize at certain points in lithium carbonate futures prices. Due to some downstream hoarding intentions, the current activity of lithium hydroxide market inquiries and quotations has been strengthened.

Electrolytic cobalt:

This week, the price of electrolytic cobalt has stopped falling and rebounded. On the supply side, smelting enterprises still maintain long-term supply, and the ex factory price remains unchanged due to the impact of production costs. Over the weekend, customs data was released, boosting market sentiment. Domestic market prices remained stable and rebounded, with trader quotes and transaction prices following suit. On the demand side, the current social inventory of electrolytic cobalt is still high, coupled with weak demand from downstream alloy and magnetic material factories affected by high temperatures. Most downstream manufacturers still maintain a rigid demand purchasing rhythm. But some traders have reported that the market's inquiry and transaction situation has improved compared to last week, and a small number of downstream enterprises have restocked in advance under the influence of bullish sentiment. Overall, the current time point is still in the off-season of demand, and the price of electrolytic cobalt will maintain a volatile pattern in the short term. The subsequent price trend needs to focus on the rise of costs and the digestion of social inventory

Intermediate products:

The spot price of cobalt intermediate products continues to rise this week. On the supply side, currently cobalt intermediate resources are relatively concentrated, and mining companies are still suspending quotations; Over the weekend, customs data was released, and the import volume of China's cobalt intermediate products in June fell sharply, further strengthening market expectations of raw material shortages. Traders are bullish and continue to raise their prices, reflecting that mainstream brands have a small amount of transactions around $12.5-12.6 per pound. On the demand side, smelters are facing difficulties such as production cost inversion and weak downstream demand. Most enterprises mainly consume their own inventory, and some smelters with low inventory reflect that the current cost inversion is too severe. If they cannot purchase low-priced cobalt intermediate products, they will choose to purchase other cobalt raw materials as substitutes, or choose to reduce production or even stop production. Overall, due to the delay policy of the Democratic Republic of Congo, China's cobalt intermediate products will still face a shortage of raw materials in the future, and there is a driving force for price increases. However, in this process, attention should be paid to the suppression of downstream demand caused by the rise in raw material prices.

Cobalt salts (cobalt sulfate and cobalt chloride):

This week, the spot price of cobalt sulfate continued to stabilize. On the supply side, due to the continuous rise in production costs, the new commodity price of smelters remains at 5.00-53000 yuan/ton, and traders hold a bullish sentiment. The old commodity price has also been raised to over 48000 yuan/ton. On the demand side, ternary precursors, tetracobalt, and other materials are still in the off-season, with no significant improvement in orders. It is difficult to accept new high priced cobalt sulfate products, which mainly consume inventory in the early stage. For first-time purchases, priority is given to buying relatively cheaper old goods from traders. Overall, the market situation this week is roughly the same as last week, with light trading volume and difficulty in continuing to rise in high transaction prices. It is expected that under the continuous rise in raw material costs, the price of cobalt sulfate may continue to maintain a strong trend in the short term, but it is still necessary to observe the improvement of downstream demand during this process.

The current quotation of cobalt chloride enterprises is 63000-64000 yuan/ton, and market transactions are relatively cold. On the supply side, the quotes from smelters continue to rise; On the demand side, downstream enterprises mainly purchase for essential needs, and transactions are mainly in bulk. In terms of price, the current actual transaction price is around 63000 yuan/ton, with slight fluctuations depending on the quality. It is expected that the price of cobalt chloride will continue to rise in the future.

Cobalt salt (cobalt trioxide):

The current quotation of cobalt oxide enterprises is between 200000 and 210000 yuan/ton, and market transactions have declined compared to before. On the supply side, some companies have started to suspend quotations and focus on issuing long orders; In terms of demand, terminal demand is relatively weak, with a decrease in purchasing demand from lithium cobalt oxide cathode factories, low purchasing sentiment, and an increase in customer to supply ratio. In terms of price, the current actual transaction price is between 205000 and 21000 yuan/ton. It is expected that the price of cobalt oxide will continue to rise in the future.

Nickel sulfate:

As of Thursday this week, the SMM battery grade nickel sulfate index price is 27000/ton, and the quotation range for battery grade nickel sulfate is 27010-27510 yuan/ton, with a slight increase in average price compared to last week. From the demand side, some manufacturers have recently had a need to replenish inventory, and their purchasing sentiment has slightly rebounded compared to last week. However, the purchasing node has not yet been fully opened, and the overall market buying enthusiasm is not significantly improved. The price acceptance of nickel salts by precursor factories has also not significantly increased. From the supply side perspective, the overall inventory level of nickel salt plants is low, and the available circulation of finished products is limited. Coupled with the pressure of high priced raw material costs, some manufacturers have the willingness to raise prices. Looking ahead to the future, the end of month procurement node for precursor factories is approaching. Currently, the supply of nickel sulfate finished products is tight, and it is expected that nickel salt prices will slightly rise.

Ternary precursor:

This week, the price of ternary precursor is showing an upward trend. In terms of raw material costs, the prices of nickel sulfate and cobalt sulfate have slightly increased, while manganese sulfate has slightly decreased. Considering the expected increase in nickel and cobalt salts in the future, it is expected that precursor prices will continue to rise. The discount coefficient signed between the current precursor manufacturers and downstream cathode factories has not been adjusted, but if the supply of nickel sulfate and cobalt sulfate becomes tight in the future, there is a possibility of an upward adjustment in the discount coefficient for individual orders. In terms of supply and demand, the production forecast for ternary precursors in July and the production schedule in August have both been raised. On the one hand, the traditional peak season of the "Golden September and Silver October" automobile market is approaching, and the industrial chain has entered the stocking stage; On the other hand, the price of lithium salts has risen rapidly recently, and some positive electrode manufacturers have chosen to purchase raw materials in advance, forming an order backlog. The domestic power market demand has rebounded, with an increase in orders for medium nickel, medium high nickel, and high nickel materials, but the market is still concentrated among top manufacturers. It is expected that the supply of ternary precursors will slightly increase month by month from July to September, and there may be a seasonal decline in the fourth quarter.

Three element materials:

This week, the prices of ternary materials in each department have increased significantly. In terms of raw materials, nickel sulfate and cobalt sulfate continued to rise, manganese sulfate slightly decreased, while lithium carbonate and lithium hydroxide prices increased significantly. Due to the expected upward trend in the prices of nickel salts, cobalt salts, and lithium salts, the prices of ternary materials may continue to rise in the future. From the supply side perspective, as the traditional peak season of "Golden September and Silver October" approaches, positive electrode manufacturers enter the stocking stage, and the production of medium nickel and medium high nickel materials has increased compared to expectations, while the production of high nickel materials remains stable. The demand side is showing differentiation: the domestic power market is mainly driven by peak season stocking and the launch of new car models, but orders are still concentrated in top enterprises; Overseas markets are continuously under pressure due to tariff policy adjustments and the reduction of subsidies for new energy vehicles. It is worth noting that multiple ternary enterprises have begun to layout lithium iron phosphate projects, which may create certain pressure on the long-term development space of ternary materials.

Lithium iron phosphate:

This week, the price of lithium iron phosphate continued its upward trend from last week, with an overall increase of about 935 yuan/ton. The price increase is mainly due to the continuous rise in lithium carbonate prices this week, with a cumulative increase of about 3900 yuan/ton. There have been no significant changes in the market this week, and the overall production of material factories is relatively stable. The production pace of the top first and second tier iron and lithium factories is relatively stable, with some even experiencing some growth. The production pace of the third tier iron and lithium factories has slowed down due to orders, and some small factories in the fourth tier have reported weak downstream demand in the near future. Looking at the demand breakdown of downstream battery cell factories, it is expected that power orders will begin to decrease this month. Energy storage, due to the rush to export to the United States in the first half of the month and the implementation of supportive policies in overseas markets such as Eastern Europe, has stimulated an increase in household storage capacity. The overall demand performance of the industry is good, driving the overall demand increase, but the increase is limited. The supply chain structure of the top first and second tier battery cell factories has recently undergone some adjustments, mainly related to product procurement prices. Overall, the industry is still mainly stable or increasing, except for a decrease in procurement demand for one or two companies. The shipment of the entire industry has slightly increased, but the increment is relatively limited. It is expected that the production of lithium iron phosphate will increase by less than 5% in July.

Iron phosphate:

There has been no significant fluctuation in the price of iron phosphate this week. Although some companies saw an increase in production in July compared to June, the increase mainly came from capacity expansion companies. Under the expansion of production capacity, enterprises have increased supply to ensure synchronous shipment volume, lowered product prices, and driven the price center of iron phosphate to slightly shift downwards in July. On the raw material side, the price of ferrous sulfate has continued to rise recently, and its transmission impact on the cost of iron phosphate is gradually expanding; The price of auxiliary material hydrogen peroxide has fallen slightly compared to the previous period. The production capacity of recycled iron phosphate will be gradually put into operation, and the market supply is expected to increase, thereby driving downstream demand for cost reduction.

Lithium cobalt oxide:

Recently, the price of lithium cobalt oxide has been relatively stable. On Thursday of this week, the price of cobalt oxide remained stable, while the price of battery grade lithium carbonate increased significantly. However, it will take time for the reaction to occur in the positive electrode of lithium cobalt oxide. On the supply side, cobalt oxide companies offer higher shipping prices, while lithium cobalt oxide cathode factories have lower willingness to purchase high priced cobalt; On the demand side, weak terminal demand has led to a decrease in demand for lithium cobalt oxide. Overall, the price of lithium cobalt oxide will increase significantly with the rise in the prices of tetracobalt and lithium carbonate.

negative pole:

This week, the price of artificial graphite negative electrode material remained stable. On the cost side, there has been a slight increase in the cost of negative electrode raw materials, providing some support for its price; On the demand side, driven by the subsequent stocking by car companies and the rebound in demand for small storage, the production pace of battery cells has recently rebounded, and the demand for negative electrode materials has also improved. Under the dual effects of cost support and demand recovery, negative electrode enterprises have generated expectations of price increases. However, due to the current situation of oversupply in the market, the price of artificial graphite negative electrode materials has fallen into a game state. Looking ahead, it is difficult to reverse the situation of overcapacity in the short term, but with the background that the prices of related raw materials may continue to rise, it is expected that the prices of negative electrode materials will continue to operate steadily in the short term.

This week, the price of natural graphite negative electrode materials remained stable under the combined effect of supply and demand and cost. Looking ahead, with the acceleration of innovation in artificial graphite negative electrodes and the continuous expansion of production capacity of gas-phase deposition silicon carbon production enterprises, downstream customers are gradually shifting their procurement focus towards alternative materials in order to reduce costs and achieve performance upgrades. This will compress the market demand space for natural graphite negative electrodes. Based on various factors, it is expected that the price of natural graphite negative electrode materials will continue to be under pressure and decline in the future.

the diaphragm:

The diaphragm market prices remained stable overall this week. Specifically, the mainstream quotation for wet diaphragm is 1.35 yuan/square meter for 5 μ m, 0.76 yuan/square meter for 7 μ m, and 0.74 yuan/square meter for 9 μ m. The mainstream quotation for dry diaphragm is 0.45 yuan/square meter for 12 μ m and 0.44 yuan/square meter for 16 μ m. The supply side is constrained by the prolonged release cycle of production capacity, and the accumulated stock capacity in the early stage has not been fully digested, resulting in a continuous pattern of oversupply in the market. On the demand side, there is a structural differentiation: the demand in the power battery field is lower than expected, while the demand in the energy storage field has exceeded previous market expectations. Under the hedging effect of the two, the overall demand in the industry has achieved a slight increase compared to the previous period. Based on the current supply-demand balance situation, it is expected that diaphragm prices will continue to maintain a stable trend in the short term, with limited price fluctuations.

electrolyte

This week, electrolyte prices are temporarily stable. On the cost side, the prices of lithium hexafluorophosphate, the core raw material for electrolytes, and solvents have increased due to the rise in raw material prices. The prices of additives have remained relatively stable, resulting in an overall increase in the manufacturing cost of electrolytes, but this has not yet been transmitted to electrolyte prices. On the demand side, the power market is affected by terminal inventory pressure, resulting in a conservative production pace. This trend is transmitted to the upstream power battery sector, leading to a slight decrease in demand for power batteries compared to the previous period. In the energy storage market, overseas energy storage demand continues to release, effectively supplementing the demand for batteries, and overall battery demand shows a slight growth trend. On the supply side, electrolyte companies continue to operate under the "production based on sales" model. Although the current electrolyte market prices remain in a low range, some companies still adopt the "price for quantity" strategy due to the structural overcapacity pattern in the industry. Based on a comprehensive analysis of multiple factors, the pattern of oversupply in the electrolyte market is difficult to reverse in the short term, and there is a lack of significant support for price rebound; However, with the rise in raw material prices, the downward trend in prices has come to an end, and it is expected that the electrolyte market prices will remain stable or even slightly increase in the future.

Sodium electricity:

This week, the sodium electricity market has performed well, and the production and order volume of NFPP continue to grow. In the second half of the year, bidding projects for sodium battery energy storage will be launched one after another, which is expected to drive the demand and shipment of sodium battery cells and their main materials. In terms of price, the scale effect of NFPP has initially emerged, and the market attention is relatively high. The quotation of positive electrode factories will further decrease with the increase of procurement volume. Although the market demand for layered oxygen has decreased compared to previous years, it is still the preferred material for rate and power products.

Recycling:

This week, the prices of salt products such as cobalt sulfate and lithium carbonate have increased, especially the price of lithium carbonate has risen significantly. This week, nickel and cobalt coefficients such as ternary, lithium cobalt oxide black powder have all increased, especially the lithium coefficient has risen significantly. Iron lithium black powder lithium point also continues to rise. At present, the black powder lithium point of iron lithium electrode sheet is 2350-2500 yuan/lithium point, and the black powder lithium point of iron lithium battery is 2200-2350 yuan/lithium point. The price has increased by 100 yuan/lithium point compared to last week. Taking ternary black powder as an example: At present, the nickel cobalt coefficient of ternary polarizer black powder is 72.5-75%, and the lithium coefficient is 70-72%. The black powder coefficient and nickel cobalt coefficient of ternary batteries are 70-72%. At present, on the demand side, most iron lithium wet process factories maintain OEM production, and the recent price increase of lithium carbonate has driven the purchasing sentiment of some customers. In recent days, the immediate cost of producing lithium carbonate from iron lithium black powder has begun to profit. On the demand side of the ternary wet process, most wet process factories maintain normal procurement and appropriately increase with salt prices; On the supply side, the psychological selling price of powder factories and traders has continued to rise with the continuous increase of salt prices, especially lithium carbonate prices. The price of black powder has basically increased with the continuous rise of salt prices, resulting in light market transactions. On the cost side, with the recent rebound of salt prices, except for the top integrated wet process factories, the profit of extracting salt from lithium cobalt oxide black powder has returned to above the profit line, but the profit of ternary and iron lithium wet process ends is still below the profit line. The profit margin of powder making is slightly better than that of wet methods, but the profit margin of powder making in some small and medium-sized factories continues to invert.