Panasonic seeks return to longer-term lithium supply contracts at lower prices
Panasonic is looking for consistent and lower lithium prices where all parties, producers as well as consumers, can enjoy adequate profits, according to the company’s executive vice president for global procurement.
Speaking at Industrial Minerals’ 10th Lithium Supply & Markets conference in Las Vegas on Thursday June 28, Masaharu Nagata said Panasonic is willing to make multi-year commitments to secure delivery of lithium.
Consistency in lithium battery-grade compounds quality is also an important requirement, Nagata said, adding that the company is ready to support producers to achieve good battery-grade quality compounds by providing them with know-how.
Masaharu Nagata speaking at the Lithium Supply & Markets conference in Las Vegas
Following the rapid growth in battery demand since the end of 2015, spot lithium prices have been a much-debated topic. Meanwhile, the shortening in long-term contracts from five-to-seven years to the current one-year contract period has been a major talking point among market participants.
The higher prices paid by the likes of Panasonic for battery-grade lithium compounds compared with before the battery boom has led the company to seek long-term partnerships with different producers to negotiate fair prices that will still be beneficial for both parties, Nagata told conference delegates.
High spot price levels within the Chinese market over the past two years remain the main price driver for new contracts signed between lithium producers and consumers.
Lithium carbonate battery-grade min 99.5% contract prices on a cif Asia basis have increased by 208% to an average price of $17.75 per kg in June 2018 from $5.75 per kg in June 2015, according to Industrial Minerals’ historical data.
Meanwhile, battery-grade lithium hydroxide min 56.5% cif China, Japan and Korea contract prices remain at historic highs of $18-21 per kg in June 2018 from contract prices below $10 per kg at the end of 2015.
Panasonic will also be looking to increase its battery-grade lithium hydroxide consumption used in the company’s nickel, cobalt, aluminium (NCA) and nickel, cobalt, manganese (NCM) battery cathodes, Nagata said at the conference.
Cobalt, supply concerns
The supply of cobalt remains a concern for Panasonic due to the high prices and worries over the mining of the mineral produced in the Democratic Republic of Congo (DRC), where over half of global production comes from.
Metal Bulletin’s low-grade cobalt prices have increased to $39.70-41 per lb as of June 29, 2018 from $10.20-11.20 per lb on February 8, 2016.
A socially responsible cobalt supply chain, compliant with environment and labor rules, is a prerequisite for the big battery maker and issues regarding the ethics of how the material is extracted in the DRC has driven Panasonic to reduce the amount of cobalt in their battery-cathodes.
Nagata said the company will reduce the cobalt used in their battery cathodes by “as much as [it] could,” without providing specific details.
*All lithium carbonate, hydroxide and spodumene prices are available in our Battery Raw Materials Market Tracker. Get a sample of the report here.