Li-ion battery raw materials are witnessing price surges in 2017 02-20-2017

According to visualcapitalist, the global Lithium-ion battery production capacity is likely going to increase by about 521% until the year 2020. The considerable fact about this is, that China, as one of the main players in the Li-ion market, will lead the share of battery production by 62% in the same year. Hence, looking at the Li-ion market worldwide means, looking primary at China’s market and the development that is happening right now.


Source: Baidu

The promotion of power battery projects as well as decisive policies in China have led to a price surge of several raw materials for the production of li-ion batteries. CCM believes, that these price hikes are likely to continue in the near future.


Raw material prices for li-ion batteries are on a hike at the moment. On February 8 of 2017, several raw materials, including electrolytic nickel, electrolytic cobalt, lithium cobaltate, and cobalt oxide, have all witnessed prices rises of 4.68% up to 12.68% MoM. This trend is likely to continue in the short run, due to several reasons, explained by CCM.


According to market watch, the raw materials are expected to develop in a different haste during the next years. Cobalt, for example, might be facing a slow grow of demand in the next years, due to the reliance on high-cobalt LCO cathode material. Lithium demand, on the other hand, is likely to increase largely in the next decade.


Nickel is going to perform better than manganese, supported of the fastest growing cathode material types NMC and NCA, which all include nickel as the main ingredient.


First of all, China’s manufacturers are releasing more big projects related to the li-ion battery industry, like alternative energy vehicle projects and power battery projects. Those projects, have an investing volume of USD3.91 billion and USD2,33 billion respectively. Hence, a huge demand for raw materials is occurring, which limits the domestic supply of raw materials and as a result elevates their prices.


Furthermore, the policy about Notice on Adjusting Financial Subsidy Policies for AEV Promotion and Application was issued in late 2016, lowering the risk for power battery enterprises in China to expand their capacity. Many enterprises have already started to expand their inventory, also leading to higher demand for raw materials.


The lowered power battery annual output standard, on the other hand, suggest manufacturers to keep the expansion in an accelerated manner. According to the Regulations on Vehicle Power Battery Industry, the annual capacity standard will be lowered from 8 GWh to 3-5 GWh. This causes concerns for Chinese enterprises, which are intensifying their capacity since the beginning of 2017.


In addition to that, the price hike of cobalt on the global market is pushing the prices on China’s domestic market as well, due to the fact that most of China’s cobalt is imported from the world market. The global price surge is caused by limited international resources and the growing difficulty of exploitation. What’s more, in the beginning of February, the world’s two largest copper ores have witnessed strikes, which are leading to a drop of copper supply in the world market.


According to CCM, the AEV output and sales volume in China increased in 2016 by more than 50%, compared to 2015. Of course, this huge growth caused a surge of demand for the raw materials of li-ion batteries. The growth of the sales volume of AEV and the demand for li-ion batteries might slow down in 2017, but it is expected to grow still in a percentage larger than 40%.


Especially the demand for ternary Lithium may rise more in 2017, given the fact that ternary li-ion batteries are showing a great advantage in specific energy. Hence, these batteries are likely to witness a preferring to lithium ferrous phosphate batteries in the upgrading and updating of power battery system in 2017.


What’s more, China is the most important player in the li-ion market worldwide. There will be only three more other players in the year 2020, according to visualcapitalist. These other players are the USA, South Korea, and, surprisingly, Poland.


About CCM

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets.


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