Price discovery in battery raw materials A news-based perspective

Transcription

1 Price discovery in battery raw materials A news-based perspective Barbara O Donovan, Industrial Minerals Advanced Automotive Battery Conference Mainz 2017

2 Agenda 1.Industrial Minerals: Price discovery 2. Lithium 3.Graphite 4.Cobalt 2

3 What is Industrial Minerals? Price reporting agency, providing independent intelligence on global mineral industries from mine to market. Information & pricing service Founded 1967 Part of Metal Bulletin Group & Euromoney Plc Events Research, consultancy, multi-client and individual reports; white papers 3

4 Metal Bulletin Group as price reporters Breadth and depth of metals and minerals Impartial and independent PRA Highly developed skills and processes in assessing prices and calculating indices Independent and transparent methodologies and price specifications Unique systems and technology infrastructure to ensure data integrity Pricing practices aligned to core IOSCO principles Used by our clients for contract pricing and internal applications The world s major exchanges (e.g. SGX, CME) use our prices to settle financial and risk management contracts Under a data licence agreement we are able to supply our data as direct feeds (XML, API) or via third-party vendors

5 News & Prices

6 2. LITHIUM Lithium demand background Overview of price movements in past 18 months Price drivers Going forward

7 Lithium Background Traditional lithium applications Ceramics Greases Glass Global End Use Markets Lithium-ion battery Consumer Electronics Electric Vehicles Stationary Energy Storage Batteries Ceramics and Glass Lubricating greases Air treatment Casting mold flux powders Polymer production Primary Alumina production Other Source: IM Lithium Market Outlook to 2021

8 Prices Overview Contract Annual vs. quarterly vs. spot Increasing price tracking to China spot price Spot (China) Soaring Price Culture

9 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 $ per kg China s rocketing prices The trend The detail Lithium Carbonate min % LiC2O3, China, $/kg Spot Lithium Carbonate (CIF Asia): $18-21/kg Lithium Hydroxide (CIF Asia): $ /kg Quarterly Contract (Q1 2017) Lithium Carbonate: $10-18/kg (large contracts, min % Li 2 CO 3, del. US) Lithium Hydroxide: $15-20/kg (large contracts, % LiOH, del. US) Time

10 Stepping it up Low High Low High Jun-14 Dec-14 Jun-15 Dec-15 0 Jun-14 Dec-14 Jun-15 Dec-15 Lithium Carbonate (large contracts, min % Li 2 CO 3, del. US, $/kg) Lithium Hydroxide (large contracts, % LiOH, del. US, $/kg)

11 Lithium Price Drivers China Demand Subsidies for electrification agenda as part of the 5-year plan Bus building in particular in 2016 Speculative traders partly responsible for height of the spike, held material whilst demand was rising then released in profit taking in June/July 2016, market softening to current levels Supply developments Everyone is looking to increase capacity Juniors Pilbara (Australia), LAC (Argentina), Quebec Lithium (Canada)

12 Current Prices Quarterly Contract (Q1 2017) Lithium Carbonate: $10-18/kg (large contracts, min % Li 2 CO 3, del. US) Lithium Hydroxide: $15-20/kg (large contracts, % LiOH, del. US) Spot Lithium Carbonate (CIF Asia): $18-21/kg Lithium Hydroxide (CIF Asia): $ /kg

13 Going Forward Balanced market but deficit looming Spodumene to join the rise Quality issue with bringing capacity online and creating battery grade material

14 3. GRAPHITE Price drivers Price overview Going forward

15 GRAPHITE Demand still dominated by traditional applications Price tied to the fortunes of the metals market Source: IM Graphite Market Outlook to 2021

16 Graphite price drivers Market remained depressed through 2016 in line with steel market Surprise removal of export tax in China has depressed price further at the beginning of 2017 Little prospect of reduction of excess capacity in China Pricing for spherical and coated graphite remains opaque but current values are at.. $2,250-$2,700 (99.95$ c, 15 microns, FOB China)

17 $ per tonne Trends are declining The trend Flake, 94-97%C, -100mesh, FCL, FOB China, $/tonne The detail Current price is $555 per tonne Down 11% on the same time last month Down almost 15% on the same time last year Time

18 Going Forward Excess supply in China Demand increases needed New processing technology needs proving and economics of CAPEX and OPEX

19 4. COBALT Price drivers Price overview Going forward

20 COBALT Demand Global cobalt demand growth rate slowed in 2015 slowing smart phone and tablet sales (LCO precursor materials) Rechargeable battery market remains the industry s growth driver with demand from this sector up 11.7%* increasing demand for NCM materials, mainly from automotive Cobalt demand in lithium ion batteries is forecast to approach or exceed 70,000t by 2020, up from the 42,360 tonnes consumed in 2015* *Source: Darton Commodities Source: IM Graphite Market Outlook to 2021

21 Price drivers EV demand Started with Tesla EV producers going direct to producers Hedge fund interest Picking up physical metal

22 $ per lb Trends reflect a new bull market.. The trend Cobalt Low Grade MB free market $ per lb in warehouse The detail Current price: $16.70 (27 January 2017) Up almost 15% on the same time last month Up 56% on the same time last year Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Time Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Source: Metal Bulletin

23 Going Forward Co-product nature of cobalt ties it to nickel and copper DRC challenges with supply chain ethics, uncertainty over concentrates export ban Changes in China could significantly move the market

24 Genuine demand, speculation or government policy? No denying that demand is rising But government policy is playing an undeniable factor Forecasts: See our forthcoming report: Lithium Market Outlook to 2021

25 Questions Barbara O Donovan Managing Editor bodonovan@indmin.com