German Lithium Hexafluorophosphate Prices Remain Bearish Amid Tepid Consumer Demand

Hamburg (Germany): Lithium Hexafluorophosphate prices in Germany continue to demonstrate weakness in February 2024, as the supply and demand fundamentals have remained insufficient to provide adequate support. Inquiries for Lithium Hexafluorophosphate from the downstream cathode active material (CAM) manufacturing industries have been lagging over the past few months due to bleak consumer procurement.

The downstream sector of lithium-ion battery manufacturing has faced subdued demand, primarily due to a cautious consumer market adopting a wait-and-see stance amidst declining prices of Lithium Hexafluorophosphate. In addition to demand factors, manufacturing firms have noted shrinking profit margins stemming from plummeting production costs of Lithium Hexafluorophosphate. Furthermore, beyond the domestic market, both North American and European Lithium Hexafluorophosphate markets have been significantly influenced by the dominant presence of the Chinese market. China's dominance in the EV markets of Europe and the US is undeniable. The emergence of Chinese EV manufacturers like BYD has been remarkable. Despite a significant decline in European EV sales in December, BYD experienced a remarkable surge, with sales increasing by 70% during the month. Moreover, BYD achieved a milestone by selling a record 526,000 battery-only vehicles in the last quarter of 2023, surpassing Tesla to become the world's leading electric carmaker.

The downstream Lithium spot prices in both Europe and the United States remained relatively stable within a narrow range due to prevailing bearish market conditions. Market participants noted sluggish spot activity and anticipate clarity on a potential reversal of the bearish trend of Lithium Hexafluorophosphate following the conclusion of the Lunar New Year celebrations. Moreover, both European and US Lithium Hexafluorophosphate markets mirror similar trends seen in Asian spot markets.

The final Purchasing Managers' Index (PMI) for manufacturing, compiled by HCOB, rose to 45.5 in January from 43.3 in December. However, the index remains well below the 50-point threshold, indicating ongoing contraction in industrial activities due to weak demand including chemicals such as Lithium Hexafluorophosphate. Moreover, essential Asian imports for Europe, including car parts, engineering equipment, and chemicals, are facing delivery delays. These delays stem from container shippers rerouting vessels around Africa instead of using the Red Sea and Suez Canal, prompted by recent attacks by Yemen's Houthis. Germany's chemicals sector, ranked as the country's third-largest industry after automotive and engineering, records annual sales of approximately $282 billion. About one-third of its imports from outside Europe originate from Asia, underscoring the sector's substantial reliance on the Asian market.

According to the ChemAnalyst database, anticipated stability in the prices of Lithium Hexafluorophosphate in Germany in the coming weeks is expected due to the potential easing of fluctuations in raw material prices. Additionally, the market sentiment for Lithium Hexafluorophosphate may trend upwards driven by domestic consumption and growth in overseas orders.