Asia black mass payables under more pressure from thin battery metal margins
Demand for black mass in key Asian import markets has faced further pressure in the past week amid weakening battery metals prices which are leaving consumers of the shredded battery powder with poor margins, sources said
The most recent deals heard done for nickel cobalt manganese (NCM) black mass with content in the range of 15-25% nickel, 5-15% cobalt and 3-5% lithium in the key South Korean market were at 72-73% CIF for nickel and cobalt payables including the value of lithium, Fastmarkets heard.
But key South Korean market sources said on Wednesday September 20 that the highest workable level would have fallen to around 70% CIF nickel and cobalt including the value of lithium this week, following further declines in battery raw materials such as lithium carbonate. Even at this level, there was scant interest from buyers, and bids were heard mostly in the range of 60-65% CIF on the same basis.
Excluding the value of lithium in black mass, sources said that the workable level in the market was at 65-70% CIF Korea for nickel and cobalt payables.
Given lithium payables of 4-5%, it put the value of NCM black mass with Fastmarkets’ specifications at an average price of $4,867 per tonne CIF on Wednesday.
Fastmarkets’ price assessments for black mass, NCM/NCA payable indicator, nickel, cif South Korea, % payable LME nickel cash official price, and for black mass, NCM/NCA, payable indicator, cobalt, cif South Korea, % payable Fastmarkets’ standard-grade cobalt price (low-end), were both 65-70% on Wednesday, narrowing down 3% from 68-70% CIF one week before.
Demand for lithium cobalt oxide (LCO) black mass, typically sourced from cellphones and other smaller domestic batteries, has reduced recently in line with poor cobalt pricing, sources said, with the material typically seeing a 5% discount on the cobalt payable compared with NCM materials.
The inaugural price assessment for black mass, LCO, payable indicator, cobalt, cif South Korea, % payable Fastmarkets’ standard-grade cobalt price (low-end) was 61-67% on Wednesday, while the inaugural assessment for black mass, LCO, payable indicator, lithium, cif South Korea, % payable Fastmarkets’ lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was at 4-5%.
Margins squeezing buyers
The weaker demand and pricing for battery raw materials has been hurting South Korean hydrometallurgic processors, particularly since they are not currently able to gain any meaningful premium for the price of their recycled products above their primary counterparts, sources said.
“The market is quite weak, as sulfate discounts from the index metal prices are severe – for nickel around 10-15%, cobalt around 15-20%, and for lithium around 10-20%,” a major South Korean buyer source said.
“Recyclers are expecting negative refining margin when buying more than 60% payables for nickel and cobalt including lithium, considering the discount for the metal products,” he added.
“The level of 72-73% CIF for nickel and cobalt including the value of lithium is no longer available due to the rapid drop in lithium below $28,000 per kg. I can say that 65-70% CIF for nickel and cobalt including the value of lithium is a more accurate market valuation,” a second South Korean buyer said.
Despite the weakening margins, supply-side factors were still keeping prices relatively well-supported.
“There has been a significant drop in demand for black mass in Asia, but we’ve not seen offer prices drop too much. Shredders [in some areas] are buying scrap at high prices, so they are offering black mass at expensive prices,” a major trader source said.
An Indian producer was heard to be offering NCM black mass at around 78-80% CIF Korea for nickel and cobalt including lithium, due to the high battery prices, but no deals were possible at this level.
But a second trading source said that the situation in South Korea was not as bad as some have described, with buyers in the country still needing to feed their capacities to recycle black mass.
“There are a number of new hydro-projects under construction in South Korea, hence competition for securing black mass is getting tough. It is likely that black mass recycling business will be suffering for a while from low metal prices, higher raw materials competition,” the first South Korean buyer said.
Demand in Southeast Asia for black mass has also taken a massive hit from weakened Chinese battery metal prices. Typically, the Southeast Asian market would pay a premium over the South Korean purchase level for black mass, but this has petered out of late, according to the first trader.
A bid for NCM black mass was heard at 67% CIF Southeast Asia for nickel and cobalt including lithium, according to a seller source, while the first trader source said that difficulty with payments in Southeast Asia had led to some contract defaults amid the low metal prices, leading to another buyer in the region being flooded with cheaper cargoes.
Fastmarkets’ inaugural price assessments for black mass, NCM/NCA payable indicator, nickel, cif Southeast Asia, % payable LME nickel cash official price and for black mass, NCM/NCA, payable indicator, cobalt, cif Southeast Asia, % payable Fastmarkets’ standard-grade cobalt price (low-end) were both 66-70% on September 20.
And the inaugural price assessment for black mass, NCM/NCA, payable indicator, lithium, cif Southeast Asia, % payable Fastmarkets’ lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was 4-5% on Wednesday.
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