Four key talking points ahead of the Fastmarkets China Battery Raw Materials Conference 2023

Fastmarkets presents the key discussion topics across the battery raw materials sector ahead of Fastmarkets’ China Battery Raw Materials conference taking place in Shanghai on December 6-7

1. Lithium price bottom dependent on spodumene prices

China’s lithium prices have been mostly trending down so far this year amid weak consumer demand and oversupply, and market participants have said they widely expect this weakness to persist into the first quarter of 2024.

However, the bottom for lithium prices is dependent on how low the price of spodumene  – an important feedstock for lithium salts production – will be, sources said.

“Given that near-term demand for lithium remains lackluster, lithium prices would remain weak. If the spodumene prices are not at the bottom yet, there’s still room for lithium salts prices to edge lower,” a Chinese lithium trader said.

There has been market chatter of a shift in the pricing mechanism for spodumene over the past month, with the quotation period (QP) on long-term spodumene contracts negotiated on a future-month basis. Fastmarkets also noted that spodumene prices are being increasingly linked to lithium salts prices.

This spodumene pricing mechanism favors lithium producers in a downward market, Fastmarkets understands.

Fastmarkets analysts forecast an oversupply in the global lithium market in 2023, with a surplus of 25,400 tonnes of lithium carbonate equivalent (LCE). The surplus will shrink to 5,150 tonnes of LCE in 2024.

Fastmarkets’ weekly price assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 123,000-135,000 yuan per tonne on Thursday November 23, down by 15,000-18,000 yuan per tonne from 141,000-150,000 yuan per tonne a week earlier, and down by 74.46% from 490,000-520,000 yuan per tonne on January 5.

Fastmarkets’ fortnightly assessment of spodumene min 6% Li2O, spot price, cif China was $1,500-1,680 per tonne on Thursday, narrowing downward by $120 per tonne from $1,500-1,800 per tonne two weeks earlier, and down by 80.25% from $7,900-8,200 per tonne on January 5.

2. Oversupply, suppressed demand exert downward pressure cobalt market

The oversupply of cobalt continued to weigh on global markets, resulting in an extended long-term contract negotiation period, a shift in purchasing model and slow spot activities.

A cobalt hydroxide seller told Fastmarkets that consumers are trying to press prices down further and gain larger discounts in the new year. “We are still under negotiations,” the seller added.

Meanwhile, a cobalt sulfate producer described the change in purchasing model from previous years: “We would like to acquire downstream orders first, then to purchase upstream cobalt hydroxide.”

In addition, many cobalt sulfate producers reported very slow buying activity in November.

“The downstream cobalt sulfate market is too depressed, with prices falling to 34,000 yuan per tonne already, and some even expect much lower prices,” a second cobalt hydroxide seller told Fastmarkets.

Fastmarkets’ daily price assessment for cobalt hydroxide, 30% Co min, cif China was $7.40-7.70 per lb on November 23, unchanged from November 22, but down by $0.80 per lb from $8.20-8.50 per lb in early November.

Fastmarkets’ weekly assessment for cobalt sulfate 20.5% Co basis, exw China was 34,000-35,500 yuan per tonne on November 22, down by 1,000 yuan per tonne from 35,000-36,500 yuan per tonne on November 17.

3. Falling nickel prices a concern for cathode making

Sulfate-cathode conversion technology once provided a buffer for nickel sulfate producers to avert the slowdown from downstream electric vehicle (EV) demand. But recent falling nickel prices mean thinner profits to draw from cathode making, Fastmarkets understands.

This has cast a shadow over sulfate producers at a time when downstream EV demand recovery remains patchy.

Profits from nickel sulfate and cathode production have narrowed, which puts small producers in a tight spot, although market sources say major integrated producers can still gain profits for now.

“No one is cutting production yet given the profits are still there, but small plants are under huge pressure,” a market source in southern China said.

The benchmark three-month nickel price on the London Metal Exchange has continued its downtrend, slipping below $17,000 per tonne to another record low of $16,495 per tonne on Thursday. This is in a sharp contrast to the highs around $30,000 per tonne at the start of the year.

“The price falls are so drastic that they could ultimately cause cathode makers to cut production,” the market source told Fastmarkets.


4. Graphite supply chain shift

The graphite market has been in a downtrend since the second half of 2022 due to the fast expansion of upstream capacity in China and slow downstream demand.

Fastmarkets’ assessment for graphite flake 94% C, -100 mesh, fob China has dropped by 32.22% since it reached a high of $830 per tonne in March 2022 to $535-590 per tonne in the most recent assessment on November 23.

Meanwhile, the assessment of graphite spherical 99.95% C, 15 microns, fob China – the natural anode precursor – plunged to a 11-year low at $2,000-2,200 per tonne in June 2023 from a nine-year high of $3,500-3,800 per tonne in early 2022.

The continuously falling prices and fast expansion of graphite capacity have triggered a growing trend of supply chain integration in China to optimize cost structure, secure raw materials and increase added value, according to sources.

“The graphite anode market will be increasingly concentrated. This could squeeze the market share of companies with only processing capacity like graphitization and spheroidization,” one anode producer in China said.

With the domestic market stepping into a transition period, Chinese producers are eyeing overseas opportunities.

Yet despite China’s mature supply chain and know-how of the industry, industry participants reported that there are uncertainties on a geopolitical level for Chinese anode producers going overseas due to the policies on materials from China, such as the Inflation Reduction Act (IRA), as well as China’s review of outbound investment.

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