Battery raw materials market update September 2024

Key points

1. Oversupply dampens market sentiment
   Lithium prices and spodumene prices are trending downward as oversupply dampens market sentiment.

2. Chinese producers showing restraint
   There are early signs of restraint among producers in China; however, more action is needed for the market to achieve balance. 

3. Producers planning future expansions
   On a positive note, many producers are still planning future expansions, which will be essential as the market inevitably grows in the coming years.

What do our analysts say?

Sentiment in the lithium market is depressed as the market has hit a patch of oversupply and weaker than expected demand. It’s always darkest just before the dawn, if we start to see more producer restraint, especially in China, then prices may find a floor.

Will Adams, Fastmarkets

Key points

1. Cobalt supply continues to outpace demand
   In the third quarter of 2024, supply continues to outpace demand throughout the cobalt value chain.

2. Metal production as a result of weakness in cobalt sulfate market
   The ongoing weakness in the cobalt sulfate market has led refiners in China to continue to produce metal, further weakening the China and seaborne metal prices. 

3. CMOC signals positive sentiment for H2 2024
   Despite these bearish fundamentals, CMOC, the world’s largest producer of cobalt, signalled positive sentiment in H2 2024 with expectations of supply pressure easing before year end.

What do our analysts say?

CMOC, the major architect of the fundamental oversupply of cobalt hydroxide in the market, is not expected to keep pace with the record H1 production. Even with a cutback on H2 output, there will need to be significant demand recovery in Q4 for market sentiment to improve. This is looking less and less likely as we move through September.

Rob Searle, Fastmarkets

Key points

1. Battery-grade prices rangebound
   Battery-grade manganese sulfate prices have been rangebound through August with limited spot buying. 

2. Manganese sulfate prices unreactive despite high-grade ore price correction
   A downward correction in Chinese high-grade manganese ore prices did little to adjust the manganese sulfate market with prices unreactive. 

3. Spot buying slow, downstream orders limited
   Spot buying remains slow with limited downstream orders from the NCM pCAM market. 

What do our analysts say?

The market remains in a wait-and-see stance. Downstream spot demand continues to be weak. Until orders return and prices increase, we expect a number of processors to remain out of the market with average utilisation rates staying under 40% at processing sites.

Rob Searle, Fastmarkets

Key points

1. Chinese flake graphite prices edge higher
   Flake graphite prices in China edged higher in August, despite weaker demand from anode producers, indicating that prices have reached their bottom. 

2. Anode production slows
   Anode producers have slowed down production after strong Q2, which has put pressure on anode feedstock prices namely spherical graphite and petroleum coke. 

3. Overcapacity will weigh on active anode material prices
   Chinese anode producers have indicated that active anode material prices are at their bottom, however overcapacity will continue to weigh on prices going upwards. 

What do our analysts say?

We believe that graphite prices are bottoming out as there is no space left for cost optimizations by graphite producers plus significant supply cuts made by ex-China graphite miners. Participants across the anode supply are struggling to operate at the current low prices, therefore we expect prices to reverse their trend. However, any price movement will be slow given the severe competition for market share.

Georgi Georgiev, Fastmarkets

Key points

1. Market in ‘wait-and-see’ mode
   Demand for black mass in South Korea has died down over the last seven weeks with Fastmarkets NCM, NCA cif South Korea black mass nickel and cobalt payables rangebound at 70.5-71.5% between July 17, 2024 and August 28, 2024. This is because the market is in ‘wait-and-see’ mode after early signs of lithium price recovery could indicate lithium prices have bottomed out. 

2. Capacity for battery recycling
   There has been great political will within Europe to develop battery recycling capabilities. Despite this there is a lack of European refining capacity which we estimate accounts for 2% of the world’s total black mass refining capacity. This is in part due to the relative infancy of the industry and in part due to spiralling costs and regulatory challenges around hazardous waste disposal. The lack of domestic demand means the Fastmarkets NCM, NCA black mass nickel and cobalt payables for exw-European are 12 percentage points lower than our exw-USA equivalent.

3. Lack of centralized regulation could further segment market
   California is leading the way in setting out legislation to implement extended producer responsibility (EPR) for end-of-life (EOL) lithium-ion batteries. Within the USA, such legislation is unlikely to occur at a federal level, instead being set by individual states. The lack of centralized regulation is likely to lead to market segmentation based on the legislative compatibility between neighbouring states. This could make it more challenging when transporting end-of-life (EOL) batteries across state borders. 

What do our analysts say?

Despite the slump in lithium, black mass prices have remained stable due to the rebound seen within the nickel price. Assuming little change in the core metal prices; the current oversupply within the lithium market will continue to depress black mass prices until end of 2024. After which, we expect to see rising black mass prices because of an increasing lithium supply deficit.

Luke Sweeney, Fastmarkets