High Cost of Cobalt Pushes Up Prices of Lithium Batteries for IT Devices by More Than 15% Between First and Second Quarter, Says TrendForce

Compared against the average of the January to March period, prices of lithium batteries for IT devices have already risen by more than 15%, reports EnergyTrend, a division of TrendForce. The price trend of IT batteries started to turn in the fourth quarter of 2016, when the global cobalt market saw rising prices and China placed greater restriction on the domestic mining of cobalt ores. In the February and March of this year, the cobalt market saw another huge price jump. As a result, the price trend of IT batteries changed from a gradual climb to a sharp upswing.

“A breakdown of the IT battery market by cell types shows that supply of cylindrical cells is shrinking steadily,” said Duff Lu, senior research manager of EnergyTrend. “The share of cylindrical cells in total IT battery supply for 2017 is projected to fall to 22%. Polymer cells on other hand will account for a greater portion of the IT battery market with their supply share growing from 40% last year to 55% this year.”

Lu added: “Despite having physical size limitations, cylindrical cells are very in-demand for mid-power applications, which include products such as electric bicycles and gaming notebooks. Furthermore, cylindrical cells are still the best choice for situations that require C-rate (>1C). As battery suppliers allocate more their production capacity to meet the growing demand for batteries powering xEVs (plug-in vehicles), the IT battery market has actually experienced a shortage of cylindrical cells.”

Lu also noted that prismatic cells were initially positioned to supplant polymer cells in the IT battery market. However, branded device vendors have been hesitant to use prismatic cells because of the weight consideration. The penetration rate of prismatic cells in the IT battery market therefore is not expected to rise significantly in the short term. Polymer cells will likely hold on to their mainstream status in the IT battery market in the next five years, enjoying steady growth in both demand and supply.

The spike in cobalt prices is causing various degrees of impact on different types of lithium batteries. High-density batteries with 3.0~3.2 ampere hours generally use lithium cobalt oxide (LCO) as the cathode material. LCO contains more of the pure cobalt metal than other ternary cathode materials such as nickel manganese cobalt (NMC). Prices of polymer cells are the most affected by the surge in cobalt prices because most of them use LCO cathodes. For cylindrical cells, some products with customized capacity specifications will also see larger price increases.

Prices of prismatic cells are also aligning with their raw material and equipment costs. Compared with price increases in the cylindrical and polymer cell markets, the price hike for prismatic cells could be just as substantial. In sum, EnergyTrend projects that the general price increase for IT batteries in this second quarter will be larger than that in the prior quarter due the rising cost of cobalt.