TrendForce has revealed that procurement demand for battery materials will decline in June, putting downward pressure on lithium prices.
This development is expected to weaken the cost support for electric vehicle (EV) and energy storage system (ESS) cell materials, leading to stable or slightly decreasing cell prices by the end of the second quarter.
Despite this, TrendForce reports that market demand for EV and ESS cells in the second quarter has been better than expected overall, with stable prices. However, the industry has faced challenges due to inventory build-up caused by cell manufacturers producing more than the end-user installation demand during the peak season from April to May.
The report highlights that after a period of low capacity utilization in the first quarter, the EV battery industry saw a significant recovery in market demand starting in March. The peak season in April led to a surge in demand, increasing lithium battery production and slightly raising EV battery prices. This trend continued into May, with stable demand and prices. The average selling prices (ASP) for square ternary, square lithium iron phosphate (LFP), and pouch ternary cells in May were CNY 0.50/Wh, 0.43/Wh, and 0.52/Wh, respectively.
In the ESS sector, May experienced a surge in demand for solar energy paired with storage. Grid-connected storage projects in China entered the stocking period in May and June, leading to increased enterprise orders and slight price increases for some products. The ASP of square LFP cells in May remained stable at CNY 0.43/Wh compared to the previous quarter.
TrendForce’s analysis indicates a transition in the ESS cells from 280 Ah to 314 Ah. Although 314 Ah ESS cells have not yet been shipped in large quantities, their mass production is expected in the first half of the year. Market penetration for these cells in power-side, grid-side, and commercial energy storage markets is anticipated to gradually increase in the second half of the year, showcasing their cost-performance advantages.