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Battery companies suffer from two extrusions positive and negative prices are still strong
In the face of pressure on the main engine plant, the automobile industry has cut prices, forcing the entire supply chain to bear the cost. Battery companies are caught in a double squeeze, leading to declining profitability. Meanwhile, raw material prices—such as lithium, cobalt, and nickel—have surged, putting further strain on upstream manufacturers who are also trying to capture more value from the market.
Despite these challenges, seven major lithium battery suppliers have reported net profits exceeding 100 million yuan in the first three quarters of the year. A review of their performance shows that all seven companies experienced growth in net profit, with Tianqi Lithium leading the pack at 1.52 billion yuan, while Yihua Group recorded 165 million yuan. Among them, Tianqi Lithium, Huayou Cobalt, and Yanfeng Lithium each saw profits over 1 billion yuan, while Shanshan, Glimme, and Hanrui had relatively smaller margins.
Year-on-year growth varied significantly. Huayou Cobalt led with an impressive 9723.35% increase, followed by Hanrui Cobalt and Yufeng Lithium. The positive outlook for the market was driven by rising demand for new energy vehicles and supportive policies, which boosted sales and created a surge in demand for cathode materials.
Cobalt and lithium prices soared due to supply-demand imbalances, remaining at high levels throughout the period. Additionally, ternary cathode materials gradually gained market share, overtaking lithium iron phosphate in some areas. In Q3 2017, domestic triple-positive capacity reached 90,000 tons, with output at 24,500 tons, showing a 15% growth, while lithium iron phosphate production dropped by 7%.
Prices of cathode materials also rose, with Sanyuan Materials reaching 200,000 yuan per ton and lithium iron materials hitting 95,000 yuan per ton. The market remained fragmented, with Long-Term Lithium holding 11% of the triple-positive market and CR3 at 31%, while lithium iron cathode had a 18% market share with CR3 at 49%.
On the negative electrode side, rising demand for graphite electrodes pushed up the price of needle coke. Environmental inspections and limited graphitization capacity also contributed to a rebound in negative electrode material prices. Artificial graphite output grew by 19%, outpacing natural graphite’s 7% rise, indicating a stronger penetration rate of artificial graphite.
Artificial graphite prices reached 55,000 yuan per ton in Q3, up 30% from the previous month, while natural graphite prices climbed to 35,000 yuan per ton, up 9%. The negative electrode market is highly concentrated, with Shanshangufen holding 31% of the artificial graphite market, and BTR dominating natural graphite with over 57% market share.
Overall, the combination of tight upstream supply and a sudden surge in downstream demand has kept power battery raw material prices on an upward trajectory, significantly boosting the profitability of material companies. With continued growth in new energy vehicle sales and the increasing adoption of ternary batteries, it is expected that cobalt and lithium prices will continue to rise.
From January to August 2017, new energy vehicle sales reached 320,000 units, a 30.2% increase year-on-year. With an annual target of 700,000 units, the gap remains large, and as sales and battery production capacity expand, the impact will extend further down the supply chain. This will allow material suppliers to strengthen their market position and improve product profitability.