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Prices of Ternary Precursors in 2024

In the first quarter, the prices of various series of ternary precursors remained relatively stable in January and February. Starting from March, the prices of all series were adjusted upward, and the upward trend stabilized around March 20th. The main reasons included: firstly, the prices of raw materials increased; secondly, in March, precursor production enterprises resumed normal work and production after the holidays. The downstream demand was favorable, and they actively stocked up goods, which was successfully transmitted upward. Precursors were produced based on sales, resulting in an increase in supply. Moreover, the overseas orders of some precursor enterprises also increased. The favorable supply-demand situation combined with the upward trend of raw material prices jointly drove the prices of ternary precursors upward.

In the second quarter, the overall price slightly decreased at the beginning of April and remained stable from mid-April to mid-May. Around May 17th to early June, the prices of various series of ternary precursors were adjusted upward again. One of the main reasons was that the prices of metal salts were at a high level, especially the price of nickel sulfate increased significantly. The high production cost forced the precursor prices to go up. From June 4th to July 3rd, it could be seen that the prices of ternary precursors generally showed a downward trend, and the downward trend was obvious. The first reason was that the fall in the price of nickel salts dragged down the cost of precursors. The cost side could not support the high price. The second reason was that the pick-up volume of cathode materials decreased in the second quarter. The demand for precursors in the precursor market was lower than expected. The supply of precursor manufacturers decreased. The overall market presented a situation of both supply and demand being sluggish. The combined impact led to a downward adjustment of the prices of ternary precursors during this period.

In the third quarter, due to the previous low-level pick-up of cathode materials, which brought a certain amount of inventory accumulation for precursor manufacturers, the demand for cathode materials was still in the recovery stage. Coupled with the low prices of metal salts, the prices of ternary precursors showed a weakening trend while remaining stable. In August, there was no obvious increase in the demand for the cathode and precursor markets. Although the production volumes on both sides increased, the main reason was to stock up in advance for the arrival of the traditional "Golden September and Silver October" consumption peak season. However, at this time, the order adjustment phenomenon in the precursor market was obvious, and the price war was fierce. In order to obtain orders from the cathode side, precursor manufacturers had weak bargaining power in terms of price and made obvious concessions. The mismatch between supply and demand forced the precursor prices to go down again. In the third quarter, precursor manufacturers suffered obvious losses. Some precursor manufacturers selectively accepted orders, and the downward space for precursor prices was limited. It is expected that the price trend of ternary precursors in September is more likely to operate weakly and stably.

Taking Ternary Precursors 523 (Polycrystalline/Consumer) as an Example to Analyze the Cost-Profit Relationship of Ternary Precursors

Taking Ternary Precursors 523 (Polycrystalline/Consumer) as an Example to Analyze the Cost-Profit Relationship of Ternary Precursors

As shown in the following figure, we can see that since the beginning of 2024, based on the cost of externally sourced raw materials, the profits of manufacturers producing Ternary Precursors 523 (Polycrystalline/Consumer) have been at a negative level. That is to say, if manufacturers want to produce, they will bear continuous losses. The ways to quickly reverse this situation are either to reduce costs as much as possible from the raw material end or to expand demand by making small profits but large sales volumes.

In the precursor market where the industry concentration is constantly increasing, the advantages of large factories with upstream raw material resources can be seen. The abundant raw material resources combined with technological advantages will well pull the manufacturing cost to a relatively low level. The stable customer relationships and a large number of output orders of large enterprises will further support the cost losses. In contrast, enterprises without resources and stable customer connections are more likely to face the risks of high-cost production and order reduction, thus further pushing these enterprises into a difficult situation.

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