Lithium carbonate and cobalt prices fell to 30% of supply and volume to promote price return to rational

From 2016 to 2017, thanks to the outbreak of demand from the production and sales volume of downstream new energy vehicles, the prices of cobalt, lithium and related compounds have risen steadily, and a number of upstream resource companies have been “fertilized” while also allowing downstream anodes. Materials and battery companies are complaining. For the large price increase of cobalt, the industry also dubbed "Cobalt Lord", "Cobalt Grandma".

 

Since the beginning of this year, cobalt, lithium and other products are no longer available. The price of lithium carbonate has dropped from nearly 180,000 yuan at the high point of last year to the current 7 to 80,000 yuan. The price of cobalt has been declining since May, and the price has dropped by 30% in less than three months since October.

 

A number of industry insiders or industry analysts told the Daily Economic News that the oversupply of cobalt, lithium and other products is the main reason for the lower prices compared to current demand. An industry insider analyzed that the current market is not optimistic about the long-term cobalt price, and it is expected that there will still be room for decline in the later stage of cobalt. On the other hand, in the face of the surge in cobalt prices, the industry has also begun to look for alternatives to cobalt, which may reduce the demand for cobalt products in the future market.

 

Oversupply is seen as the main cause of falling prices

 

Metals such as cobalt and lithium have become the main raw materials for the manufacture of lithium batteries due to their unique chemical properties. However, compared with the “scenery” of price increases in the previous two years, the prices of cobalt, lithium and related products have “falling down” this year.

 

Baichuan Information's commodity price statistics show that on December 19th, the average price of battery-grade lithium carbonate was 81,000 yuan/ton, down 52.35% from the beginning of the year; the average price of electrolytic cobalt was 366,000 yuan/ton, down 33.76% from the beginning of the year; the remaining cobalt trioxide The prices of products such as lithium cobalt oxide also fell by about 30% from the beginning of the year.

 

Among them, the trend of cobalt has attracted more attention. Since May of this year, the price of cobalt products has started to fall slowly. Since mid-October, the decline has expanded rapidly.

 

“The main reason is that supply exceeds demand.” A brokerage researcher who has long tracked the new energy industry analyzed the decline in cobalt prices this year. According to the reporter of "Daily Economic News", on the one hand, the capacity expansion has caused the upstream bargaining power to weaken. On the other hand, the battery factory and the material factory have weakened the procurement in the tight capital chain environment. Even in the peak season, the positive electrode materials only have the mainstream supply. There is a shortage of quotients. At the same time, there was a certain "bubble" in the price of cobalt. The reason for the decline in the price of related lithium products is the same. "Because of overcapacity, after the expansion in 2017, the production capacity will gradually be released in 2018, and the supply will increase substantially."

 

From 2016 to 2017, the production and sales volume of domestic new energy vehicles drove the demand for power batteries, which made the demand for cobalt, lithium and related products in the upstream of the industrial chain increase and prices soared.

 

According to statistics, in 2015, the price of lithium carbonate was less than 50,000 yuan / ton, and has since risen to about 150,000 yuan / ton, and last year it has approached a high of 180,000 / ton. At the beginning of 2016, the price of electrolytic cobalt was about 200,000 yuan / ton. Since the fourth quarter of 2016, the price of cobalt products has started to rise, and the highest price once exceeded 600,000 yuan / ton.

 

An insider of a new energy auto company also believes that the current price volatility of the above products stems from oversupply, which is the result of both upstream and downstream games, as well as the expectation of subsidies for downstream new energy vehicles.

 

According to relevant data from the Northeast Securities Research Institute, in the first half of 2018, global cobalt consumption was about 56,000 tons, and supply was around 60,000 tons.

 

A cobalt enterprise person told the reporter of "Daily Economic News" that cobalt is mainly used in the field of 3C (consumer electronics). Although the application in the field of power battery is growing faster, the application base is small and the proportion is small. And the demand from the 3C field this year is not very satisfactory.

 

Lithium is used more in the field of power batteries, and the source is more abundant than cobalt. In addition, the technology of mergers and acquisitions, expansion of production and lithium extraction in salt lakes have gradually matured in recent years, and the supply of lithium products has increased greatly.

 

Industry: Future prices will continue to return

 

Cobalt, lithium and other products have been cut in price, and the business performance of related resource companies has been affected, while downstream cathode materials companies and lithium battery companies have benefited, and the gross profit margin and other data have improved. The price fluctuations of cobalt, lithium and other products have a certain impact on the entire lithium battery industry chain, and industrial chain companies are also more concerned about the future trend.

 

Zhang Heng, an analyst at Baichuan Information Cobalt, said that the price of cobalt may be lower in the future. "The price of metal cobalt should be stabilized at around 350,000 yuan, because this price is basically the break-even point of the smelter."

 

Zhang Wenchen, a new energy analyst at Pacific Securities, pointed out to the reporter of "Daily Economic News" that with the continuous increase in production capacity, the relationship between supply and demand will improve and the price will return rationally. In the future, lithium resources will remain at a reasonable price.

 

It is also a rare metal, but the source and scarcity of cobalt and lithium are different. Zhang Wenchen said that domestic lithium resources are not scarce, while cobalt resources are outside and subject to people.

 

It is reported that the African country Congo (Gold) accounts for two-thirds of global cobalt production. "If any industry is stuck in the neck by certain resources, then the industry will not be able to be promoted on a large scale, and the sharp rise and fall of the prices of related commodities is not conducive to industrial development." Zhang Wenchen said.

 

During the period of soaring cobalt prices, many downstream companies began to look for alternatives to cobalt in order to reduce their dependence on cobalt because they were too costly.

 

In May this year, according to foreign media reports, Tesla CEO Musk said that Tesla reduced the proportion of cobalt in the battery to reduce the dependence on cobalt resources. "We believe that the acquisition of cobalt resources is still difficult."

 

The cathode material manufacturer Dangsheng Technology (300073, SZ) also said that the downstream consumption sector has been replacing lithium cobalt oxide with multi-materials to reduce costs since the previous years. After the cobalt price rises sharply, this substitution will become more obvious.

 

The high-nickel power battery or the main trend of lithium batteries in the future. Earlier, Tesla proposed the strategy of “reducing cobalt and increasing nickel”. Smart Energy (600869, SH) said that due to its high energy density and high subsidy quota, high nickel 811 materials will become an important development trend of power batteries in the future.

 

Zhang Wenchen pointed out to reporters that in the future, the ternary power battery will be highly nickelized, and the demand for cobalt will be halved.

 

From the supply side, the future cobalt production may increase. Some analysts pointed out that in the next few years, Congo (Gold) cobalt mines will gradually increase in volume. From 2018 to 2019, the total supply will be 36,700 tons and 76,000 tons respectively. In 2022, it is expected to reach 106,400 tons.