Looking back at the lithium battery raw material market in 2018, the new energy subsidy policy played a significant role in driving up the key turning points in cobalt and lithium prices (as shown in the table below). With the year-end approaching, rumors are circulating in the industry about a further reduction in new energy vehicle subsidies next year. Although there is no official announcement yet, companies are already preparing for the next round of subsidy reductions.
In April 2018, just two months after the 2018 new energy subsidy policy was announced, Wotema Group collapsed, with its parent company, Jianrui Woneng, announcing over 2 billion yuan in overdue payments and freezing the bank accounts of 13 companies. The incident subsequently spread, impacting important consumption channels for lithium iron phosphate and lithium carbonate. As a result, the price of lithium carbonate fell below 150,000 yuan/ton and entered a period of accelerated decline.
While the impact of subsidy policies on cobalt prices is not directly reflected in events, it can be observed through year-on-year price trends. Compared to the second and third quarters of 2017, and the end of the second quarter and the beginning of the third quarter, the 2018 cobalt price did not replicate last year's price turning point. During that period, the fundamentals were also characterized by oversupply. However, a key reason why this year's market trend could not repeat itself is that end-users are constrained by tight funding after the subsidy reduction, material manufacturers are under cash pressure, and are unable to keep up with international price increases.
Smm believes that under the dual pressure of subsidy reduction and competition from Japan and South Korea, battery manufacturers need to do their best to increase energy density while ensuring safety.
The selection and matching of positive and negative electrode material systems determine the energy density of a battery. Taking the mass distribution of a 30Ah pouch cell as an example, the cell energy density can reach 53% of the theoretical energy density of the materials. A battery with 300Wh/kg requires a theoretical energy density of 570Wh/kg (this value can also be achieved after weight reduction). However, the current industry standard is 230Wh/kg, which still represents a considerable gap.
If we break down the 570Wh/kg requirement further, as shown in the diagram above, with a positive electrode capacity of 200-220mAh/g and an negative electrode capacity of 600-800mAh/g, the theoretical energy density can reach 570Wh/kg. Therefore, for material manufacturers, high-energy-density cathode materials are a strategic development direction. The technological solutions for high-energy-density cathode materials mainly involve high voltage, high specific capacity, and high compression ratio. SMM believes that each battery manufacturer is developing different product platforms to match different types of positive and negative electrodes, and the corresponding cathode material requirements will become more diversified and customized.
