Cell prices stabilize in 2Q14, price uptick expected in 3Q14

Following cylindrical cells price and volume usage declines, supply and demand for the technology is expected to remain flat in the second quarter of 2014, due to lowered supply coupled with slight demand increases. Additionally, manufacturers estimate prices will stabilize, ending roughly a two-year decline, according to recent findings from EnergyTrend, a subsidiary of Taiwan-based market intelligence firm TrendForce.

Graph 1: Cylindrical cell supply and demand 

EnergyTrend said the turnaround is expected to come as manufacturers shift production capacity of cylindrical cells to more power applications, which can be seen from Korean manufacturers move towards LEV and PT. Samsung is one example, with battery cells in power applications exceeding 50%. Cylindrical cells usage has moved from solely consumer electronics product applications to high profit margin non-IT applications as well, which has limited overall IT battery supply. 

Thin notebooks meanwhile have become a major focus in the consumer electronics market. Since these type of notebook components became more affordable, market penetration rate for thin-film type cells increased from 8% in 2013 to 22% in 2014. This means demands for prismatic and polymer cells will increase. Additionally, impact from Xiaomi and LGC’s power bank sales promotion strategies has led to high capacity cylindrical cell demand increases, which is stimulating a new wave of low-priced power bank demands. Chinese and Korean manufacturers too have seen steady Chinese market demands. Intensified power bank competition in the Chinese market is expected to spread to the global market during second half of 2014. 

Lithium cell pricing trend in 3Q14

Cylindrical cells: Shifted production lines and decreased supplies have affected cylindrical cells. Battery cell price drops have halted and supplies tightened in some cases, yet prices remained flat because of manufacturers’ insignificant volume usage growth in 2Q14. Low-capacity battery cells have remained at US$ 0.65/Ah over the last two quarters while high-capacity cell price decline was within 2%. 

Prismatic cells: Prices dropped 1.5-2% for first-tier manufacturers, since shipments were low in second quarter. Despite China’s rising battery cells production, it has limited impact on top international brands, due to Chinese manufacturers’ product quality issues, which has confined applications to white-box handsets and tablets. 

Polymer batteries: Korean manufacturers hope to replace cylindrical cells with polymer units to lower prices. Most vendors do not use polymer technology, but prices are expected to continue to drop well into second half of this year, and could threaten cylindrical cell manufacturers. 

Graph 2: Changes in cell price