SHANGHAI, Mar 7 (MM) – According to data released by the China Academy of Information and Communications Technology, China's mobile phone shipments totalled 33.02 million units in January 2022, a year-on-year decrease of 17.7%.
The shipments of 5G mobile phones fell 3.5% YoY to 26.32 million units, accounting for 79.7% of the total mobile phone shipments. The chip shortages and rising raw material prices pushed up the costs of some smart phones, especially the low-end products, resulting in weaker-than-expected demand for upstream lithium cobalt oxide (LCO) batteries and materials.
SMM data showed that China’s LCO output stood at 7,582 mt in January, down 4% both on MoM and YoY basis.
Lithium salt prices kept rising amid tight supply, forcing some LCO plants to reduce their output. LCO prices climbed along with lithium salt prices, but end users were resistant to the price increase. Downstream producers purchased as planned and rarely stockpiled excessive raw materials. LCO output is expected to decline In February due to the Chinese New Year (CNY), lithium salt shortages and a shorter month. SMM estimates the domestic LCO output to be 6,081 mt in February, down 10% MoM, but up 5% YoY. Driven by the sharp increase in lithium prices, LCO prices rose significantly after the CNY holiday. As lithium shortages look unlikely to be alleviated significantly any time soon, rising raw material costs will support LCO prices up further.
The SMM monthly average price of tricobalt tetraoxide stood at 404,400 yuan/mt in January 2022, an increase of 9% month-on-month and 72% year-on-year. Tricobalt tetraoxide prices will still have small room to increase amid rising costs.
LCO plants hardly restocked after the CNY holiday and stood on the sidelines as the inventory on hand could sustain their production for some time. Slightly rising cobalt sulphate and cobalt chloride prices increased the costs of Co3O4 (tricobalt tetraoxide) producers, but the price transmission to downstream buyers was not smooth. In mid-February, LCO plants began to restock, while the prices of cobalt sulphate and cobalt chloride continued to rise along with refined cobalt and intermediate products, encouraging Co3O4 producers to raise their offers to 420,000 yuan/mt. The quotations of major Co3O4 producers were around 420,000-425,000 yuan/mt at the end of February, but trades were thin due to weak downstream demand and slow price transmission to end users.
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