By Susan Zou
Cost and safety are the two major hurdles facing the use of
NCM811 batteries - which include nickel, cobalt and manganese
in a ratio of 8:1:1 - in electric vehicles. This is despite the
application of China’s 2018 EV subsidy policy,
which raised the usability threshold at which EVs would receive
subsidies by requiring a longer driving range and a higher
energy density and, in turn, encouraged the adoption of
nickel-rich batteries for EV applications in the country.
"I don’t think any EV producers are ready to
start using NCM811 batteries in their cars," a battery
materials producer said.
"We have seen NCM811 batteries used in consumer electronic
products [but] not a single pack of NCM811 batteries has been
applied to EVs yet," a second battery materials producer
Battery types that use less nickel - such as NCM523 (nickel,
cobalt, manganese in a ratio of 5:2:3) and NCM622 (nickel,
cobalt, manganese in a ratio of 6:2:2) - are likely to prevail
in the EV industry in 2019, even though the persistent strength
of cobalt prices from late 2016 until early 2018 forced battery
manufacturers to focus on innovations in nickel-rich battery
types last year.
Fastmarkets’ standard-grade cobalt benchmark
price - used by Chinese cobalt producers to calculate raw
materials import costs - moved up quickly after 2016,
reaching a 10-year high at $43.70-44.45 per lb in April 2018.
Since mid-April 2018, the price of cobalt has shown a
It dropped quickly during most of the remainder of the
second quarter and into the middle of the third quarter,
reaching $33.00-33.60 per lb by the end of August.
And, after a modest recovery in September, the price started
to fall again in mid-November, dropping to $26.50-28.00 per
lb by the end of December due to urgent destocking by
suppliers ahead of the end of the year.
The price then dropped further on January 4, to $25.75-27.25
Similarly, the price for Chinese cobalt sulfate, a key
material in the production of NCM battery types, climbed to a
multi-year high of 145,000-150,000 yuan ($21,164-21,894) per
tonne on April 11, 2018, according to
Fastmarkets’ price assessments.
The cobalt sulfate price has fallen since then, and was
assessed by Fastmarkets at 65,000-68,000 yuan per tonne on
Over the same period, an increasing number of market
participants realized that the obstacles to the technological
innovations required to enable NCM811 batteries to function
safely in electric vehicles have not been completely conquered,
and are not likely to be resolved in the near-term.
"[Due to immature technology, the] current NCM811 battery is
not likely to be applied in EVs at the current stage [of
development], in addition to the [complications created by]
falling cobalt prices," a third battery materials producer
said. "Instead, the market is concentrating on the production
and further development of the NCM622 battery."
The producer added that it had received more orders for
NCM622 lithium-ion battery materials in the second half of last
year than it did in the first half.
|Chinese lithium hydroxide and lithium
carbonate prices 2017-2019
Less cobalt may not mean lower production
One of the motives behind battery makers’
attempts to develop nickel-rich batteries and to reduce cobalt
usage was to cut production costs. But after almost a year
spent developing the NCM811 battery, the market has come to
accept that the production cost for this type is still much
higher than for NCM622 or NCM523 batteries, despite the
significant reduction in the price of cobalt.
And the price premiums that lithium hydroxide carried over
lithium carbonate last year added to the overall production
costs for NCM811 lithium-ion battery materials.
NCM811 lithium-ion battery materials require the use of
lithium hydroxide in the production process, rather than the
lithium carbonate that is used to produce NCM622 and NCM523
equivalents. This is because the latter types are not able to
withstand the same high temperatures that the former must go
through during the sintering process.
The announcement of China’s EV policy early
last year created an expectation of wider use of nickel-rich
batteries in the EV industry. Since then, lithium hydroxide has
consistently been sold at higher prices in the spot market than
lithium carbonate, with the price gap widening.
Fastmarkets’ price assessment for spot lithium
hydroxide monohydrate, min 56.5%, battery grade, ex-works
China, was 100,000-110,000 yuan per tonne on December 27.
On the same date, the price for lithium carbonate, min
99.5%, battery grade, ex-works China, was 75,000-83,000 yuan
per tonne, reflecting a gap of 26,000 yuan per tonne. The gap
was at its widest in October when lithium hydroxide traded at
prices 39,000 yuan per tonne higher than lithium carbonate.
Production of NCM811 lithium-ion battery materials also
requires higher investment in sinter processing and
environmental protection, according to market participants.
"Unlike NCM523 or NCM622 lithium-ion battery materials,
NCM811 lithium-ion battery materials require oxygen in the
sintering process, which adds more than 10,000 yuan per tonne
to the processing costs," the second battery materials producer
"Besides, to produce NCM523 and NCM622 lithium-ion battery
materials, you only need to sinter once, but for NCM811
lithium-ion battery materials, you have to sinter two or
three times, which again results in extra costs," he added.
Overall, the production cost for NCM523 and NCM622
lithium-ion battery materials from their precursor materials is
around 20,000 yuan per tonne. The equivalent cost for NCM811
lithium-ion battery materials is currently at least 50,000 yuan
per tonne, market participants told Fastmarkets.
"Even if cobalt prices rebound in 2019," the third battery
materials producer said, "given the current cost [of] lithium
hydroxide and other production costs, producing NCM622
batteries is still more economically practical than NCM811
Fastmarkets changed the names of its benchmark in-warehouse
Rotterdam cobalt price assessments on January 2, 2019. The name
'standard-grade’ has replaced the name
'low-grade’. The name 'alloy-grade’
has replaced the name 'high-grade’.
Alteo signs battery materials agreement with Ginet
French company Alteo has signed an agreement to supply
China’s Suzhou Ginet New Materials Technology with
super-fine alumina for surface coatings in lithium-ion battery
separators and electrodes.
Ginet is a high-tech company specializing in high-end
inorganic non-metallic powder materials. It will grind alumina
powder made by Alteo to meet growing demand from the battery
Alteo has high-value specialty alumina capacity of more than
500,000 tonnes per year.
The companies did not disclose how much alumina Alteo will
supply to Ginet under the terms of their agreement.
Fastmarkets IM’s price assessment for alumina,
calcined, ground 98.5-99.5% Al2O3, bulk, ex-works US/Europe,
on a long-term contract was $860-1,000 per tonne on Thursday
January 3, unchanged from a month earlier.