Korean cathode material firms hit by sharp decline in lithium prices

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South Korea’s battery material manufacturers posted weak earnings for 2023 amid a sharp decline in lithium prices and weak demand for electric vehicles.

According to industry sources on Sunday, cathode material companies are feeling the brunt of the collapse in lithium prices, with lower product selling prices and sluggish front-end demand.

The pricing of cathode materials is directly linked to the prices of raw materials, including lithium, at the time of sale. With the decrease in mineral prices, companies are forced to sell cathode materials, produced from previously expensive raw materials, at lower prices, negatively impacting profitability.

In 2023, POSCO Future M Co.’s Energy Materials Division, which engages in cathode and anode materials businesses, posted an operating loss of 11.7 billion won ($8.74 million).

The company faced a substantial operating loss of 73.7 billion won in the fourth quarter of last year, reflecting the depreciation of inventory assets due to the decline in prices of lithium and other secondary battery materials.

L&F Corp. recorded an operating loss of 222.3 billion won on a consolidated basis for last year, experiencing a negative turnaround from the previous year.

L&F said during its earnings conference call that the sharp drop in lithium prices, coupled with a significant increase in the loss of NCM523 sales amounting to 180 billion won, and inventory evaluation losses reaching 250.8 billion won, contributed to the challenging financial results.

LG Chem’s Advanced Materials Division also reported lackluster performance compared to the previous year. The operating profit for LG Chem last year dropped by 36.6 percent to 585 billion won.

According to market tracker KOMIS, the price of lithium carbonate was 86.50 yuan per kilogram as of Friday, down 18 percent from 474.5 yuan recorded on January 3 of the previous year.

The price of lithium carbonate was 86.50 yuan per kilogram on Friday, which is only about 18 percent of 474.5 yuan recorded on January 3, 2023.