Chinese EV subsidy to be phased out; other policies to follow
Wang agreed with the market consensus that China’s EV subsidy policy will be terminated one day, with some market participants expecting this to happen in 2020.
But the anticipated termination of EV subsidy policy does not mean China will stop encouraging the application of EVs, Wang told Fastmarkets.
“[The relevant government departments] will take other measures to promote the production of electric vehicles,” he said, adding that a dual credits policy was a likely measure.
The dual credits policy is made up of a corporate average fuel consumption (CACF) credit and New Energy Vehicle (NEV) credit which set standards for both fuel consumption and production and sales of EVs respectively.
Such credits will encourage carmakers to continue investing in and developing EVs even once the incentives disappear as a result of cancellation of the EV subsidy policy.
“If [car makers] produce vehicles driven by petroleum, which causes pollution to the environment, then they need to pay more money. And such measures could provide long-term stimulation to the adoption of electric vehicles,” Wang said.
Effect on market preference
The termination of China’s EV subsidy policy is not expected to have much effect on consumers’ preferences for high- or low-nickel battery types, according to Wang.
“[Preference] would still be dependent on the maturity of the battery technology, and what the general feedback towards using nickel-rich batteries is,” he said.
In addition, the price of battery materials will also be a key driver behind what type of batteries consumers prefer; whether they choose the slightly less nickel-weighted NCM 523 (nickel:cobalt:manganese at a ratio of 5:2:3) or NCM 622 (nickel:cobalt:manganese at a ratio of 6:2:2) batteries instead of NCM 811 batteries, Wang told Fastmarkets.
“The price gap between lithium carbonate and hydroxide could be another key reason to make people still go with NCM523 and NCM622 batteries,” Wang said.
Unlike NCM523 and NCM622, NCM811 batteries require lithium hydroxide in their production rather lithium carbonate, which is incapable of withstanding the same high temperatures that the former can during the sintering process.
The price of lithium hydroxide moved higher than that of lithium carbonate in late March this year, and the gap has continued to widen thereafter on the anticipation of a wide adoption of nickel-rich batteries in China’s EV sector following the announcement of the country’s EV subsidy policy.
Fastmarkets assessed the lithium hydroxide monohydrate min 56.5% battery grade, ex-works China price at 110,000-120,000 yuan ($15,845-17,285) per tonne on November 15, while the price for lithium carbonate min 99.5% battery grade, ex-works China was at 74,000-83,000 yuan per tonne, reflecting a gap of 36,500 yuan per tonne.
A gap of 40,000 yuan per tonne was recorded on September 20 this year, signaling the largest differential between the two prices since Fastmarkets begin assessing these markets.
Battery materials prices under pressure
For cobalt sulfate – a key raw material used in the production of NCM – the supply-demand balance remains a key factor influencing prices of the material, according to Wang.
“Downstream consumers have the upper hand in negotiations as producers have quite a few stocks to sell,” he added.
Chinese cobalt sulfate prices have been dropping since April on persistent weak demand following the announcement of China’s EV subsidy policy amid lingering constraints on cash flow and credit availability.
Fastmarkets assessed the Chinese cobalt sulfate price at 76,000-80,000 yuan per tonne on November 16, compared with 145,000-150,000 yuan per tonne on April 11 – the highest level since Fastmarkets began assessing this market in March this year.
Cobalt tetroxide prices, meanwhile, remain under pressure while the demand for lithium cobalt oxide (LCO) batteries, which is the largest consumer of cobalt tetroxide, has been shrinking. LCO batteries are used in consumer electronics, such as mobile phone, laptops, etc.
“There are limited spaces to develop mobile phones. In addition, have we witnessed the substitution of LCO battery by nickel-cobalt-manganese battery in consumer electronics,” Wang said.
“For now, mobile phones are still stuck with LCO batteries, but some other consumer electronics, such as power banks, and drones have started to use NCM batteries,” Wang added.
Fastmarkets assessed the cobalt tetroxide price in China at 280,000-300,000 yuan per tonne on November 16, compared to an all-time high of 510,000-520,000 yuan per tonne in early April.
“Nickel wise, quite a few projects have stagnated in the past few years because of descending nickel prices, however, with a positive outlook on EV demand [for the metal], these projects have resumed,” Wang said.
“On the other hand, the share of nickel applications within EV batteries is small [at present] compared with cobalt. As a result, the bullish views on nickel prices are still based on expectations,” Wang stressed.
Fastmarkets assessed the Chinese nickel sulfate price at 25,000-25,500 yuan per tonne on November 13, compared with 26,000-27,500 yuan per tonne on July 24 when Fastmarkets began assessing this market.
Beijing Easpring Materials Technology Co is a leading lithium-ion battery cathode materials producer in China, dedicated to the production of NCM and LCO battery materials which are used in EVs, energy storage systems and the information technology sector.
Source : https://www.metalbulletin.com/Article/3844150/INTERVIEW-Adoption-of-NCM-811-batteries-in-EV-sector-progressing-slowly-Beijing-Easpring-exec-says.html945