Despite the spike in electric vehicle (EV) sales in China during September, performance in the battery raw materials market was mixed, sources said.
China produced 879,000 units of EVs in September, a year-on-year increase of 16.1%. The total production of EVs in September included 589,000 units of pure electric vehicles (PEVs), up by 1.5% year on year, while the output of plug-in hybrids was 290,000 tonnes, up by 64.1% from the corresponding month of 2022.
Total sales of EVs reached 904,000 units in September. PEV sales increased by 16.2% year on year to 627,000 units, and plug-in hybrid sales spiked by 64.4% from a year earlier to 277,000 units.
From January-September 2023, a total of 6.31 million units of EVs were produced, up by 33.7% on a yearly basis, while total sales increased by 37.5% to 6.28 million units over the same period.
Meanwhile, from January to September, production of PEVs totaled 4.46 million units, up by 21.1% compared with the year prior, while output for plug-in hybrids rose by 78.9% on a yearly basis to 1.85 million units. Within the same period, sales of PEVs reached 4.47 million units, up by 24.9% and plug-in hybrids increased by 83% to 1.81 million units.
The robust EV output and sales growth could be attributed to a series of consumption stimulus plans issued by China’s national and local governments, which included subsidies and consumption coupons, according to CAAM.
Despite the overall growth in the downstream EV sector, upstream raw materials including lithium, cobalt, nickel and graphite are facing ongoing headwinds due to slow demand, while supply constraints for cobalt and nickel sulfate provided price support in the recent month, sources said.
China’s lithium prices have been mostly on a downtrend in the recent month due to headwinds from ongoing weak demand from battery producers amid market oversupply and a lack of confidence of a near-term demand recovery.
Downstream battery producers in China have reduced procurement rates of lithium amid sufficient inventories on hand and lower demand due to reduced production rates resulting from weak battery demand, sources told Fastmarkets.
China’s power batteries output totalled approximately 69.9 gigawatt hours (GWh) in September, but only 36.4 GWh of power batteries ended up being installed during the month, according to the China Automotive Battery Innovation Alliance.
“Spot demand for lithium carbonate is very thin. Cathode producers are keeping their lithium salts inventories at a very low level amid expectation of ongoing price downtrends and limited orders from battery makers. Consumers, meanwhile, are only purchasing lithium salts on a hand-to-mouth basis,” a Chinese lithium trader said.
While market participants did not widely expect demand to surge in September and October given the ongoing weakness in the lithium market, some market participants still hoped that there would be a small round of restocking after China’s Golden Week holiday.
“We haven’t seen any restocking after the holiday and demand for lithium remains at its pre-holiday level,” a Chinese lithium producer source said.
China’s lithium prices rebounded in the recent week, supported by strength in the futures market. But market participants maintained a cautious attitude toward the sustainability of the rebound, citing a lack significant improvement in lithium demand.
Fastmarkets’ price assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 163,000-170,000 yuan ($22,352-23,312) per tonne on October 12, narrowing upward by 3,000 yuan per tonne from 160,000-170,000 yuan per tonne on the previous assessment on September 28.
The latest assessment was 32,000-35,000 yuan per tonne lower from 195,000-205,000 yuan per tonne on September 7.
Fastmarkets’ price assessment of lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price range exw domestic China was 148,000-160,000 yuan per tonne on Thursday October 12, down by 2,000-10,000 yuan per tonne from 150,000-170,000 yuan per tonne on the previous assessment on September 28.
The latest assessment was 32,000-40,000 yuan per tonne lower from 180,000-200,000 yuan per tonne on September 7.
Prices for cobalt sulfate, another key battery raw material, increased slightly September due to a lack of availability cheaper materials, while producers pushed up offers to test market tolerance, sources said.
Fastmarkets’ price assessment for cobalt sulfate, 20.5% Co basis, exw China was 38,000-39,000 yuan per tonne on October 13, unchanged from October 11, but down by 3,000 yuan per tonne from 35,000-36,000 yuan per tonne from September 1.
“Most cobalt sulfate producers have started to push up prices since September because the cheaper spot raw material, cobalt hydroxide, is hard to find. Meanwhile, continually rising cobalt tetroxide prices brought some support to cobalt sulfate,” a cobalt sulfate producer source said.
The producer added, “But demand from the downstream nickel-cobalt-manganese (NCM) sector hasn’t picked up significantly, so I am still holding watchful attitude to see how higher the cobalt sulfate prices could be.”
Fastmarkets’ daily price assessment of cobalt hydroxide 30% Co min, cif China was $8.00-8.30 per lb on Friday October 13, up from $7.80-8.00 per lb on October 12. The price was up from 7.30-7.60 per lb on September 1.
China’s nickel sulfate prices traded in a narrow range through September due to an absence of strong upward drivers. Demand from downstream chemistries remained bleak, leading producers to reduce production, which eventually tightened supply.
Meanwhile, supply constraints stemming from lack of feedstock has underpinned sulfate prices despite weak demand.
Fastmarkets’ price assessment of nickel sulfate min 21%, max 22.5%; cobalt 10ppm max, exw China was 31,000-32,000 yuan per tonne on October 13, flat since September 29. The price spiked by 4.10% to 31,500-32,000 yuan per tonne on September 22, though soon retreated by 0.79% in the following week.
Liquidity and buying sentiment remained thin, however, sources said.
“Under current market conditions, where market shares in high-nickel ternary chemistries are decreasing in China, prices remaining stable is already good news,” an industry source said, citing falling nickel futures prices.
The benchmark nickel price on the London Metal Exchange closed at $18,672.5 per tonne on October 13, and has been hovering around this level since late September, down notably from $20,675 per tonne on September 1.
In the market for manganese sulfate, another raw material in cathode production, market participants lamented the oversupply resulting from rapid capacity expansion in the recent year, which has added pressure to the current market.
Fastmarkets’ latest weekly price assessment for manganese sulfate 32% Mn min, battery grade, exw mainland China was 5,000-5,650 yuan per tonne on October 12, unchanged since September 14.
The market for major anode raw materials painted a similar picture of weakness.
Prices for green petroleum coke, a feedstock for synthetic anode materials, have been on a downward trend since the start of September, falling by 17.88% in the space of one and a half months.
Fastmarkets’ latest weekly assessment for green petroleum coke 0.5% S, ex-works China was 2,600-3,600 yuan per tonne on October 11, down by 3.13% from the previous session.
Meanwhile, the price for petroleum needle coke, the major feedstock for high-end anodes, moved up slightly at the end of September due to high costs and limited profit margins with sellers trying to hold price firm, sources said.
Fastmarkets’ latest weekly price assessment of petroleum needle coke 0.5% S, ex-works China 4,800-5,000 yuan per tonne on October 11, widening upward by 100 yuan from the previous assessment.
“Despite the current stability in prices of needle coke, the market is still under pressure due to competition from the falling green petroleum coke price, the potential substitute for petroleum needle coke in certain anode production,” a needle coke producer said.
The producer added, “In addition, the downstream application [of needle coke] is limited to graphite electrodes and high-end synthetic anodes, a [more limited utilization] compared with green petroleum coke.”
The price for graphite flake has remained weak, staying on a slight downward trend in September after plunging by 30.36% in the first eight months of the year.
Fastmarkets’ latest price assessment for graphite flake 94% C, -100 mesh, fob China was $530-604 per tonne on October 12, falling slightly by 0.18% from the previous assessment.
“While there has been no obvious recovery in the downstream market, even with a slight price downward trend in anode precursors, prices for flake fines could be supported to some extent by an expected winter shutdown in Heilongjiang province, a major production hub for flake graphite,” a flake graphite trader said.
Production of flake graphite in the north of China is expected to be suspended due to the extremely cold weather from the end of November to April of next year.
The price of uncoated spherical graphite, which uses flake fines for feedstock, has been holding stable since the start of June when they hit a 11-year low.
Fastmarkets’ price assessment for graphite spherical 99.95% C, 15 microns, fob China was $2,000-2,200 per tonne on October 12, unchanged since June 1.
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