Battery Cathode Materials Market Analysis: Week Ending 17 December 2024

This will be our last edition of 2024.

Best Wishes for the Festive season !

We'll be back next month.

BUT, in this edition...

Contents:

Part A

1. Weekly Price Movements - summary

2. Pricing table

3. Monthly price movements - summary

4. Market Insights

Part B

"The Unassailable Dominance: China's EV Supremacy"

by Dev-Ad MagZ

Part 3 (of 8)

Part A

Weekly Price Movements:

NMC Materials

• NMC811 and NMC523: Prices fell by 0.3% and 0.6%, respectively, reflecting continued weak demand for high-nickel chemistries. Nickel sulfate also dropped by 0.6%, further signaling oversupply in the nickel market.
• Lithium Hydroxide: Decreased slightly by 0.1%, indicating stable but subdued demand for lithium-based chemistries.
• Manganese Sulfate: Declined by 1.0%, the largest weekly drop among NMC precursors, likely due to reduced demand for manganese-rich chemistries.
• Spodumene Concentrate: Increased by 0.2%, supported by tight supply conditions following earlier production cuts.

LFP Materials

• LFP Cathode Material: Fell by 0.8%, continuing its recent downward trend as lithium carbonate prices dropped by 1.3%.
• Ferro-Phosphate: Declined slightly by 0.3%, reflecting minor cost adjustments in LFP precursor materials.

LMO and LCO Materials

• LMO Cathode Material: Dropped by 0.3% week-on-week, reversing gains from earlier weeks.
• EMD Grades (LMO and Alkaline): Both declined slightly by 0.1%.
• LCO Cathode Material: Fell by 0.4%, with cobalt tetraoxide down by 0.3%, reflecting weak demand for cobalt-heavy chemistries.

Monthly Price Movements

NMC Materials

• NMC811 and NMC523: Prices dropped by 1.7% and 2.3% over the month, reflecting sustained pressure on nickel and cobalt markets due to oversupply and lower EV demand growth.
• Nickel Sulfate: Declined by 4.2% over the month, underscoring persistent oversupply issues.
• Spodumene Concentrate: Increased by 3.1%, driven by tight supply and strong demand for lithium carbonate production.

LFP Materials

• LFP Cathode Material: Remained flat over the month, reflecting stable long-term demand despite short-term price fluctuations.
• Lithium Carbonate: Fell by 2.0%, reflecting adjustments in lithium supply following earlier production cuts.
• Ferro-Phosphate: Declined marginally by 0.7% over the month.

LMO and LCO Materials

• LMO Cathode Material: Increased by 2.0% over the month, supported by renewed interest in manganese-based chemistries like LMFP (Lithium Manganese Iron Phosphate).
• LCO Cathode Material: Dropped significantly (-3.3%), reflecting declining cobalt demand amid a shift toward LFP batteries.

Key Price Movers

• Largest Weekly Increase: Spodumene Concentrate (+0.2%) Reflecting tight supply conditions following earlier production cuts.
• Largest Weekly Decrease: Lithium Carbonate (-1.3%) Driven by supply adjustments as demand stabilizes.

Market Insights

Supply Chain Dynamics

1. Nickel and Cobalt Oversupply: Continued declines in nickel sulfate (-4.2% monthly) and cobalt sulfate (-1.9%) reflect weak demand for NMC batteries as manufacturers increasingly adopt lower-cost alternatives like LFP and LMFP technologies.
2. Lithium Tightness: Spodumene concentrate’s monthly increase (+3.1%) highlights persistent tightness in lithium supply, which could impact future lithium carbonate prices.

Technological Shifts

1. LFP Stability: Despite short-term fluctuations, LFP materials remain a dominant choice for EVs and energy storage systems due to their cost-effectiveness and safety advantages.
2. Emerging LMFP Technology: The rise of LMFP batteries is driving renewed interest in manganese-rich materials, supporting modest gains in LMO cathode prices (+2% monthly).

Global Market Trends

BloombergNEF reports that battery pack prices fell to $115/kWh in 2024, the largest annual drop since 2017, driven by economies of scale, lower metal prices (including nickel and cobalt), and increased adoption of LFP batteries.

This trend underscores the growing pressure on traditional NMC materials as manufacturers pivot to cost-effective alternatives.

Comparative Analysis

Weekly vs Monthly Trends

1. Short-Term Volatility vs Long-Term Declines: While some materials like spodumene concentrate showed slight weekly gains (+0.2%), broader monthly trends reveal stronger upward momentum (+3.1%) due to tightening supply.
2. Nickel’s Persistent Weakness: Nickel sulfate’s weekly decline (-0.6%) aligns with its significant monthly drop (-4.2%), highlighting sustained oversupply challenges.

Key Observations

1. The decline in NMC materials reflects a structural shift toward lower-cost chemistries like LFP and LMFP.
2. Lithium carbonate’s sharp weekly drop (-1.3%) signals stabilization after earlier volatility but may face upward pressure if spodumene supply tightens further.

Conclusion

The battery cathode materials market continues to navigate structural changes driven by technological shifts, evolving supply-demand dynamics, and growing adoption of cost-effective alternatives like LFP and LMFP batteries. Stakeholders should monitor these trends closely as they signal long-term changes in global battery material demand patterns and pricing strategies.

Part B

"The Unassailable Dominance: China's EV Supremacy"

by Dev-Ad MagZ

Part 3 (of 8)

Part 3:

Chain Stranglehold - The West's Dependency Dilemma

Introduction.

• In the previous installments of this series, we explored China's overwhelming market dominance and unparalleled manufacturing capabilities in the electric vehicle (EV) sector.
• Now, we turn our attention to another critical aspect of China's EV supremacy: its iron grip on the global supply chain. This stranglehold creates a dependency that Western manufacturers are finding increasingly difficult to break, further solidifying China's position as the world's EV leader.

China's Control Over the EV Supply Chain

• China's dominance in the EV supply chain is most evident in the battery sector. As of late 2024, China controls a staggering 75% of global lithium-ion battery production capacity, with Chinese firms holding 90% of the market share in cathode production and 97% in anode production. These components are essential to every lithium-ion battery, highlighting not just China's production capacity but also its critical role in supplying Western manufacturers.
• China's control extends beyond finished products to the processing of raw materials. Approximately 70% of the world's lithium and 60% of its graphite, both vital for battery manufacturing, are processed in China. Even when raw materials are mined outside China, they often end up being processed there, giving China unprecedented control over the entire battery supply chain.
• Moreover, China's influence reaches beyond batteries to other crucial EV components, such as electric motors, power electronics, and rare earth magnets. This dominance creates a challenging environment for Western manufacturers who face significant cost and quality disadvantages when sourcing these components from alternative suppliers.

Geopolitical Implications

• China's control over critical EV components gives it significant leverage in international trade negotiations. The threat of restricting access to essential EV components can be used as a diplomatic tool, especially amid rising geopolitical tensions. For instance, the U.S. has recently increased tariffs on Chinese-made EVs from 25% to 100%, while the EU has imposed provisional anti-subsidy tariffs of up to 37.6% on imports from China.
• In response to these tariffs and trade restrictions, Chinese manufacturers are diversifying their markets by establishing production facilities in third countries like Hungary and Thailand. BYD's investment in Hungary is a prime example of how Chinese firms are positioning themselves to circumvent potential trade barriers while maintaining access to European markets.

Western Responses and Challenges

• Western countries are grappling with their dependency on China's EV supply chain, but their responses have been fragmented and often inadequate. The U.S. Inflation Reduction Act aims to incentivize domestic battery production and critical mineral processing to reduce reliance on Chinese supplies. However, building a competitive supply chain from scratch is a monumental task that will take years. While companies like Tesla are attempting to secure direct deals with lithium miners, these efforts pale in comparison to China's established dominance.
• European automakers face a similar dilemma, balancing their dependency on Chinese batteries with the growing competition from Chinese brands in their home markets. In 2024, Chinese brands captured approximately 11% of the EU EV market, up from just 2.5% in 2023. This shift has prompted discussions within the EU about implementing protective measures against what they perceive as unfair competition from subsidized Chinese products.
• Many Western companies are exploring ways to diversify their supply chains away from China but struggle to find alternative suppliers that can match China's scale, cost efficiency, and quality. Reports indicate that even when Western firms attempt to establish new relationships with non-Chinese suppliers, they often revert back to Chinese sources due to the lack of viable alternatives.

Conclusion

• China's stranglehold on the global EV supply chain presents a formidable challenge for Western manufacturers. The dependency on Chinese components and materials creates vulnerabilities that extend beyond the automotive industry, with profound geopolitical implications. As trade tensions rise and competition intensifies, Western countries are confronted with the urgent need to reduce their reliance on China's EV supply chain.
• However, breaking free from this dependency will require coordinated efforts at both corporate and governmental levels. It involves not only building new factories or signing trade deals but also rethinking industrial policies and approaches to technological development. The future competitiveness of Western EV manufacturers may depend heavily on their ability to adapt swiftly to the challenges posed by China's supply chain dominance.

As we look ahead to the next part of our series,

we'll examine how China's technological innovations in the EV sector are further widening the gap with Western competitors.

From advanced battery chemistries to autonomous driving systems, China is not just keeping pace—in many areas, it's leading the charge.

[End of Part 3]

Thank you for your continued readership.

I look forward to engaging in this critical discussion with you in the New Year.

Cheers for now,

Magnus.

https://www.dhirubhai.net/in/magnus-bekker/