![]() The commissioning of greenfield lithium projects will help balance the market and moderate prices over the next two years. The rising trend reflected miners getting greater value from the industry, especially after a severe shortage of lithium units. The ratio had risen to more than 11% in May, a record high, from 3%-6% in 2021, before dropping to 7.5% in June. Nonintegrated refineries procuring spodumene from the spot market have returned to being profitable since May 18 due to the rebound in the lithium carbonate spot price and a drop in the spodumene-to-carbonate price ratio. Battery precursor and cell costs declined in June, compared with increased lithium chemical and cobalt prices. The battery downstream has yet to pass the rise in lithium and cobalt costs to their customers, however, signaling resistance to the metals price increases. Rising battery production is reviving the need to restock lithium and cobalt chemicals. Several auctions held in China since March 11 for lepidolite concentrate and lithium carbonate from brines in Qinghai province have solidified the price recovery, with the lithium carbonate settlement price equivalent to 300,000 yuan/t. Lithium producers are holding offer prices firm due to recovering demand, which will likely further improve in the second half, typically a period of seasonal strength for PEV sales. The spot lithium price is up 77.3% from the April 25 bottom but still down 44.8% from the peak Nov. The price then slipped a marginal 0.3% June 19–21 to 313,000 yuan/t. The rebound in China's lithium carbonate price slowed in June, rising 4.5% month-to-June 19 compared with 62.7% during the same period in May. ![]() The policies signal a willingness to support the broader economy and consumption. The support for PEVs can be viewed in conjunction with cuts this month to key policy rates, which lower the cost of borrowing for financial institutions, households and enterprises. The 339,000 yuan vehicle price cap for VAT exemption is broadly aligned with the vehicle price eligibility cap of 300,000 yuan for the state subsidy prior to its termination. The full tax exemption will also be capped for vehicles priced at about 339,000 yuan from 2024 and 170,000 yuan from 2026 to better target those consumers where affordability concerns are more acute while encouraging an ongoing reduction in PEV costs. The extension will provide policy continuity for the next few years and will help cushion the impact of the central government terminating PEV purchase subsidies in January. Elsewhere, passenger PEV sales in Europe top-4 markets and the US rose 28.1% and 8.0%, respectively.Ĭhina has extended by four years the value-added tax (VAT) exemptions for new energy vehicles, which are now expiring at the end of 2027. Lithium-iron-phosphate batteries led the increase, with the share of this battery chemistry rising 4.4 percentage points to 66.9%, providing relatively stronger support for lithium demand than for cobalt. PEVs accounted for 30.5% of China's passenger car exports in May, with Europe and Southeast Asia the largest destination markets.Ĭhina's traction battery production rose 20.4% month over month in May to 56.6 GWh, the highest monthly production so far in 2023, on the recovery in PEV sales. The country's passenger PEV sales rose 10.5% month over month in May, while the penetration rate hit 33.3% - the highest since December 2022. ![]() Passenger PEV sales rose across all top markets in May, with total sales up 12.7% month over month, led by China in volume terms. ➤ We expect both the cobalt and lithium prices to be range-bound until a clear indication of the sales strength of PEVs emerges in the second half. ![]() The battery downstream has yet to pass on the rise in lithium and cobalt costs, however, signaling resistance to the price increases. ➤ Lithium and cobalt producers' confidence in demand improvement underpins price recoveries across both metals. ➤ The Platts Cobalt 99.8% European price rose 7.7% month-to-June 22, closing at $15.30 per pound on improved demand for cobalt-containing traction batteries and on tightness in cobalt availability. ➤ The rebound in China's lithium carbonate price slowed in June the price rose 4.5% month-to-June 19 before slipping 0.3% to 313,000 yuan per metric ton June 21. ➤ China's traction battery production rose 20.4% month over month in May to 56.6 GWh, the highest monthly production in 2023 to date. ➤ Passenger plug-in electric vehicle (PEV) sales rose across all top markets in May total sales were up 12.7% month over month. In its monthly Lithium and Cobalt Commodity Briefing Service (CBS) report, S&P Global Commodity Insights discusses the lithium and cobalt markets within the broader macroeconomic environment and provides rolling five-year supply, demand and price forecasts.
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