Panasonic seeks return to longer-term lithium supply contracts at lower prices

By Martim Facada
Published: Thursday, 06 September 2018

Panasonic is looking to achieve consistency in the price of its lithium supplies through a long-term partnership with a producer, while it also tries to reduce its consumption of cobalt from controversial origins.

Japanese manufacturer Panasonic is willing to make multi-year commitments to secure deliveries of lithium, company vice president Masaharu Nagata said at Industrial Minerals’ 10th Lithium Supply & Markets (LSM) conference in Las Vegas, United States, on June 28.

Consistency in lithium battery-grade compounds quality is also an important requirement, Nagata said, adding that the company is ready to support producers to achieve good quality battery-grade compounds by providing them with knowhow.

Following the rapid growth in battery demand since the end of 2015, spot lithium prices have been a much-debated topic. Meanwhile, the shortening of long-term contract periods to only one year from the former 5-7 years has been a major talking point among market participants.

The higher prices paid by the likes of Panasonic for battery-grade lithium compounds, compared with before the battery boom, have led the company to seek long-term partnerships with different producers to negotiate fair prices that will still be beneficial for both parties, Nagata told conference delegates.

High spot prices in the Chinese market over the past two years remain the main price driver for new contracts signed between lithium producers and consumers.

Contract prices for lithium carbonate, battery-grade, min 99.5%, on a cif Asia basis, increased by 208% to an average of $17.75 per kg in June 2018 from $5.75 per kg in June 2015, according to Industrial Minerals data.

Meanwhile, contract prices for battery-grade lithium hydroxide, min 56.5%, cif China, Japan and South Korea, remained at historic highs of $18-21 per kg in June 2018, up from less than $10 per kg at the end of 2015.

Panasonic will also be looking to increase its battery-grade lithium hydroxide usage in its nickel, cobalt, aluminium (NCA) and nickel, cobalt, manganese (NCM) battery cathodes, Nagata said at the conference.

The supply of cobalt remains a concern for Panasonic due to high prices and worries over the mining of the mineral in the Democratic Republic of Congo (DRC), the source of more than half of global production.

Metal Bulletin’s low-grade cobalt prices increased to $39.70-41 per lb on June 29, 2018, from $10.20-11.20 per lb on February 8, 2016.

Nagata said that the company would reduce the amount of cobalt used in its battery cathodes by "as much as [it] could," but did not give specific details.