Nickel and Lithium Price Fluctuations Cast 'Yellow Light' on Korea's Battery Price Competitiveness

The prices of lithium and nickel, key minerals for batteries, have recently shown divergent trends. There are concerns about the weakening price competitiveness of Korean battery companies that manufacture batteries with high nickel content.

According to the Korea Resource Information Service on the 26th, the international nickel price is around $29,600 per ton (approximately 37.84 million KRW), a 34.5% increase from just two months ago when it was $22,000 per ton (approximately 28.12 million KRW). On the other hand, the price of lithium (based on lithium carbonate) is currently 510.5 yuan per kilogram (approximately 93,227 KRW), showing a 12.2% decline since reaching a peak of 581.5 yuan (approximately 106,152 KRW) on November 11 last month. Nickel and lithium are essential materials for electric vehicle batteries. Although prices have steadily risen since the electric vehicle market began gaining attention in 2020, recent price trends are showing a different pattern.

Nickel is the main raw material that determines the performance of cathode materials. The higher the nickel content, the better the driving range and energy density of electric vehicles. Demand remains steady, but there are supply chain instability issues. The recent price trend is largely influenced by New Caledonia, one of the major nickel-producing regions, deciding to limit production at the Goro mine, one of the largest nickel deposits, due to waste leakage issues. Additionally, Vale, the world's largest nickel producer based in Brazil, is reported to reduce nickel production next year.

The rise in nickel prices is unfavorable for domestic companies mainly producing ternary batteries represented by NCM (Nickel-Cobalt-Manganese) batteries. Recently, 'high-nickel batteries' with nickel content exceeding 90% have become the main products of Korean battery companies, meaning they must bear the burden of raw material costs due to nickel price increases. Raw material prices can be reflected in sales prices after 2 to 3 months.

The problem lies in price competitiveness. Chinese companies use LFP (Lithium Iron Phosphate) batteries that do not contain nickel. Although LFP has lower energy density compared to ternary batteries mainly produced by Korean companies, it significantly lowers cost competitiveness by using iron as the main cathode material instead of expensive minerals like nickel and cobalt. Furthermore, lithium, which is used more in LFP batteries than in NCM batteries, is showing price stability, which is expected to widen the price competitiveness gap between Korean and Chinese batteries.

The utilization of LFP batteries is expanding thanks to their price competitiveness. Recently, Tesla and Ford have also decided to adopt LFP batteries in their electric vehicles one after another, and technological advances are gradually improving the energy density of LFP batteries. CATL, a leading Chinese battery company, started operating its first overseas production base this month in Erfurt, Germany. The plant has a capacity of 14 GWh, capable of producing batteries for 280,000 electric vehicles annually. Until now, Chinese battery companies like CATL have grown mainly through domestic production plants focused on the domestic market. However, they plan to actively enter the European and North American markets, which are entering the electric vehicle market expansion phase.

This content was produced with the assistance of AI translation services.