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Wednesday, January 27, 2016 6:04:22 AM
Korean EV Batteries Makers: Buy On Dip, China Ban Won’t Last, Says Bernstein
Korean battery makers Samsung SDI (006400.Korea) and LG Chem (051910.Korea) tumbled yesterday after China said electric buses that use nickel manganese cobalt and nickel manganese cobalt batteries will no longer receive central government subsidies. Samsung SDI and LG Chem dominate in NMC/NCA battery manufacturing.
This ban is clearly politically motivated. Beijing is now worried about its local battery makers’ inferior market position. But NCM is clearly a superior battery and China’s manufacturers are far, far behind, noted Bernstein Research. Beijing will have to come around if it is serious about environmental protection in China. Analyst Mark Neuman wrote:
Look at the price Jump in China.
Global and China Lithium Carbonate Industry Report, 2016-2020
NEW YORK, Jan. 26, 2016 /PRNewswire/ -- Driven by a surge in sales volume of new energy vehicles in China, the upstream material- lithium carbonate was in short supply in the fourth quarter of 2015 with soaring prices. Global lithium carbonate output increased by 12.3% year on year to 202,800 tons in 2015 and is expected to arrive at 244,200 tons in 2016, 288,900 tons in 2017, and 341,000 tons in 2018, a rise of 20.4%, 18.3%, and 18.4% from a year ago, respectively.
The booming sales of new energy vehicles worldwide will boost lithium carbonate consumption significantly. According to estimates, every 100,000 new energy vehicles (electric bus (40%), electric sedan (20%), hybrid bus (25%), and hybrid sedan (15%)) will create a demand of 5,000 tons to 8,000 tons of battery-grade lithium carbonate, about a rise of 5%-8% in global demand for battery-grade lithium carbonate.
The price of lithium carbonate in China has been going straight up since Oct 2015 with that of industrial-grade and battery-grade lithium carbonate rising substantially (to RMB120,000/t and RMB150,000/t in Jan 2016, respectively, when battery-grade lithium hydroxide was quoted at RMB140,000/t, compared with the bottom price of lithium carbonate standing at RMB50,000/t). It is expected that global demand for lithium carbonate will outpace supply during 2016-2017, leading to a continued price rise during this period. As new lithium carbonate capacities are gradually released after 2017, the price will tend to stabilize.
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