The Cost of Cell Increase by More Than 60% in 2021, Overall Price Raising is Inevitable in Battery Industry

Recently, pointed by lithium battery insiders, domestic first-tier battery companies have notified contracted customers to re-negotiate prices, and their quotations may be increased by about 20%. According to SMM, the domestic battery industry lately will increase prices in a unified manner. The long-term contract signing method is still being negotiated with downstream companies next year. It can also be seen that the battery companies are willing to increase prices this time.

The collective price increase behavior of battery companies is also expected. Since the beginning of this year, lithium battery materials cost have increased significantly. For example, the price of battery-grade lithium carbonate has risen from an average price of 63,000 yuan/ton in January to more than 200,000 yuan in the near future, which has went up by 228%! The price of lithium hexafluorophosphate has risen from 110,000 yuan/ton at the beginning of the year to 560,000 yuan/ton, leaped over 400%! The prices of the four main materials of lithium batteries have also risen accordingly. The price of ternary materials rose by 73%, lithium iron phosphate materials by 133%, and electrolyte by 172%!

As cost of all materials of lithium batteries are on the rise, the cost of lithium batteries continues to rise. The cost of the conventional 523 square ternary battery cell rose from 0.5 yuan/Wh average price in January to 0.84 yuan/Wh in November, which grew up by 63%. The cost of square lithium iron phosphate batteries also rose from an average price of 0.42 yuan/Wh in January to 0.69 yuan/Wh in November, which jumped by 62%.

In the past years, the cost of battery cells has been declining year by year, while it has increased by more than 50% this year. However, battery companies have adjusted their prices in the power market less this year, and most of orders still maintain the prices at the beginning of the year. The overall supply-demand contradiction between battery materials is still unresolved next year. Under the influence of the winter production reduction in Qinghai Salt Lake and the slow expansion of mine production, the overall supply and demand are imbalanced, and the price is expected to remain high next year. Due to the concentration of enterprises and the chemical performance of the products, the expansion speed of lithium hexafluorophosphate is also slow, and the price is difficult to decline. The shortage of other solvents is expected to gradually alleviate in the second half of next year, and the price of electrolyte is expected to be more difficult to fall. Whether the negative electrode graphitization output will be released smoothly next year is also a problem, the supply shortage is still difficult to solve, and the negative electrode price still has room for upwards. Diaphragm equipment supply problems may intensively break out next year, which may affect the release of new diaphragm production capacity, and diaphragm prices may also rise.

In general, the price of lithium battery materials is expected to remain high next year, and the cost of lithium batteries is still difficult to control. In order to ensure the normal operation of raw material suppliers, it is also necessary for battery companies to increase prices. In order to ensure next year's production schedule being completed successfully, auto companies are more likely to accept price increases.

At present, it is difficult for the cost of cells to fall in the past two years. For vehicle companies, the past two years are also the key time to occupy market share. Therefore, to control cell costs, except for raising price of vehicles, it is particularly important to bind midstream materials and upstream raw materials companies, and to predict the cost of future raw materials in advances and some other ways.

The above report comes from Shanghai Nonferrous website.