According to TrendForce, the power market is currently experiencing insufficient demand, and battery manufacturers are showing a reduced willingness to restock their inventory. Instead, they are primarily focused on depleting their existing stock. As a result, there isn’t enough demand to uphold the prices of lithium materials in the upstream sector, leading to a continual decrease in average prices.
In October, the average price of power batteries in China continued to decline. However, when compared to the price trends in August and September, the rate of decline in October was somewhat smaller. Specifically, the decline in electric vehicle (EV) batteries was around 2%, lithium cobalt-coated batteries for consumer electronics decreased by 1.3% per month, and energy storage batteries experienced the most significant decline, falling by 3.3% per month.
Based on TrendForce’s analysis, the power and energy storage market is currently experiencing a lackluster demand, leading battery manufacturers to scale back their raw material purchases. Additionally, the traditional peak season has concluded, and it appears unlikely that demand will see a significant uptick before the year's end. Consequently, companies in the middle and downstream sectors will find it challenging to deplete their inventories, and the adjustment process may be delayed. We believe that businesses in the middle and upstream segments of the industrial chain should consider adapting their production capacity to prevent a more intense price competition stemming from accumulating inventory.
Regarding energy storage batteries, October witnessed a notable reduction in orders in the energy storage market. This decline is primarily attributed to the fact that in October, the average price of LFP (Lithium Iron Phosphate) batteries dropped to 0.5 yuan/Wh, with the lowest price reaching nearly 0.4 yuan/Wh. As a result, the inventory of energy storage batteries remains high, and the middle and upstream industrial chain companies will encounter greater challenges in reducing their stock due to the decreased customer demand. Consequently, it is anticipated that energy storage prices will further decline in November.
Regarding consumer batteries, the market took a positive turn in October. This was attributed to the launch of new phones, which boosted the demand for digital products, and a slight uptick in cobalt prices, providing some cost support to the batteries. However, the ongoing pressure from the decreasing prices of lithium carbonate and other raw materials has led to further price declines in LCO (Lithium Cobalt Oxide) batteries. Nevertheless, the monthly decline rate has risen to 1.3% and is expected to stabilize in November.
In 2024, China’s new energy vehicle market continues to show robust growth potential, while electric vehicle sales in Europe and North America are expected to increase further. Notably, in the U.S. market, where the rate of automotive electrification (including BEV and PHEV) remains below 10%, there is substantial room for growth within the electrification trend.
Given the slow progress in localizing the European power battery industry and the dominance of Japanese and South Korean battery manufacturers in the U.S. market, the U.S. market will rely on the Chinese supply chain for a certain period. Therefore, it is anticipated that China’s exports of lithium-ion batteries will perform well in 2024. However, due to the continued expansion of production capacity in China’s lithium battery industry in 2023, there will be an oversupply of lithium batteries extending into 2024. Consequently, the price of China’s power batteries is expected to continue its gradual decline in 2024.
