Weekly Market Overview: Cost Pressures Mount Across the Supply Chain
The lithium-ion battery supply chain experienced a significant cost-push inflationary wave during the week of September 18, 2025, originating from a sharp upward movement in key upstream raw materials. The market’s primary drivers were a notable rebound in lithium carbonate (LCE) prices after a period of weakness and a sustained rally across the cobalt complex, including cobaltosic oxide and cobalt sulfate. This surge in foundational costs is creating considerable tension as it propagates through the value chain, meeting varied and often stiff resistance from downstream players.
The impact of this upstream volatility is not being absorbed uniformly. The cathode sector, in particular, has fractured into divergent paths. Lithium cobalt oxide (LCO), heavily exposed to cobalt pricing, saw its value increase sharply, buoyed by strong seasonal demand from the consumer electronics market. In contrast, mainstream chemistries like nickel-cobalt-manganese (NCM) and lithium iron phosphate (LFP) remained largely stable, struggling to pass on rising input costs to powerful battery cell manufacturers. Concurrently, the anode materials segment is facing a critical margin squeeze. Despite rising costs for essential feedstocks like calcined petroleum coke and needle coke, finished anode prices remained static, pinned down by intense competition and aggressive downstream price negotiations.
Adding another layer of complexity to these dynamics is a palpable short-term demand pull. Across multiple segments, downstream enterprises have begun replenishing inventories in anticipation of China’s upcoming National Day holiday and the major “Double Eleven” shopping festival. This pre-holiday stocking is amplifying demand for certain materials, such as LCO and electrolyte components, further influencing price negotiations and market sentiment.
Key Price Movements: A Snapshot of the Value Chain
To contextualize the week’s market dynamics, the following table provides a consolidated view of price movements for bellwether products across the lithium-ion battery value chain. The data highlights the stark contrast between the inflationary pressures in raw materials and feedstocks and the relative price stability in finished anode and mainstream cathode materials.
Table: Weekly Price Summary (Sep 18 vs. Sep 11, 2025)
| Material Category | Product | Price Sep 11 (RMB/T) | Price Sep 18 (RMB/T) | Weekly Change | Key Driver / Commentary |
| Lithium Salts | Battery-Grade LCE (>99.5%) | Price was lower | 72,500 | Rebounded | Futures price rebound; pre-holiday replenishment. |
| Battery-Grade LiOH (granular) | 74,250 | 74,250 | 0.0% | Stable-and-weak scenario; tight supply from turnarounds offset by industry overcapacity. | |
| Cathode Materials | 5-series NCM (Single Crystal) | 119,300 | 119,400 | +0.1% | Minor uptick tracking LCE rebound and rocketing precursor costs. |
| Dynamical-type LFP | 34,800 | 34,800 | 0.0% | Stable amid strong ESS demand but facing LCE cost pressure. | |
| LCO 4.45v | 226,500 | 230,500 | +1.8% | Sharp increase driven by upward cobaltosic oxide prices and strong 3C market demand. | |
| Anode Materials | Mid-end Artificial Graphite | 26,500 | 26,500 | 0.0% | Prices hovering at the cost line amid intense competition and downstream pressure. |
| Anode Feedstocks | Mid-sulfur CPC | 2,300 | 2,350 | +2.2% | Bullish cost support from GPC and active demand from anode graphitization plants. |
| Electrolyte | LiPF6 | Price was lower | 55,500 | Floated Up | Supported by rising LCE/LiF costs and pre-holiday demand from electrolyte producers. |
In-Depth Analysis: The Cathode & Raw Materials Complex
A Tale of Two Markets: LCO Surges While LMO Slides
The cathode materials market demonstrated a profound divergence this week, underscoring how the health of specific end-markets can dictate the price trajectory of a material, often overpowering broader raw material trends. This was most evident in the opposing movements of lithium cobalt oxide (LCO) and lithium manganese oxide (LMO).
LCO prices moved up sharply across all grades. The benchmark LCO 4.45v grade, for example, increased by a significant RMB 4,000 per tonne, or 1.8%, from RMB 226,500/T to RMB 230,500/T. Other grades saw similar increases, with LCO 4.2v rising by RMB 4,000/T and LCO 4.5v climbing by RMB 4,000/T. This surge is directly attributable to two powerful, concurrent forces. First, the price of its primary feedstock, cobaltosic oxide, continued its upward trend, reaching an average of RMB 226,500/T and providing strong cost-side support. Second, a robust demand signal emerged from the 3C (computers, communications, and consumer electronics) digital market. Downstream battery manufacturers “obviously increased procurement” to build inventory for the upcoming “Double Eleven Festival,” a major online shopping event in China that drives significant electronics sales.
In stark contrast, LMO prices slid down. Dynamical-type LMO (from manganese dioxide) fell from RMB 35,500/T to RMB 35,000/T, while volumetric-type LMO dropped by RMB 1,000/T to RMB 32,000/T. This decline occurred despite the rebound in LCE, a shared raw material. The weakness is explicitly linked to lackluster performance in its key end-markets. Demand from the two-wheeled electric vehicle market, a primary consumer of LMO, “fell short of expectations,” while demand from the energy storage market was only described as “a bit better”.
The opposing trajectories of LCO and LMO serve as a clear barometer for the relative health of their respective consumer sectors. While both materials are subject to lithium market fluctuations, their price movements this week were ultimately governed by demand-side fundamentals. The consumer electronics sector is signaling a strong seasonal peak, pulling LCO prices upward in its wake. Conversely, the underperformance in the two-wheeler segment is exerting downward pressure on LMO, forcing producers to lower prices despite rising lithium costs. This highlights the increasingly segmented nature of the battery market, where a monolithic view is insufficient to capture the nuanced dynamics at play.
NCM and LFP: Absorbing Upstream Shocks
The market for NCM and LFP, the workhorse chemistries for the electric vehicle (EV) and energy storage systems (ESS) sectors, was defined by a deceptive stability. Official prices for dynamical-type LFP remained flat at RMB 34,800/T, and 5-series NCM saw only a negligible increase of RMB 100/T to RMB 119,400/T. This surface-level calm, however, conceals a building storm of cost pressure that cathode producers are currently forced to absorb.
The stability in finished cathode prices stands in direct opposition to the sharp inflation of their constituent materials. The report notes that NCM precursor prices “rocketed,” with the NCM 523 precursor reaching an average price of RMB 79,300/T. Simultaneously, the LCE market “bounced back,” increasing a fundamental cost for both NCM and LFP production. This creates a significant and growing gap between the cost of goods sold and the achievable sales price for cathode manufacturers.
The reason for this discrepancy lies in the balance of power within the value chain. Downstream battery cell manufacturers, who are themselves under immense pressure from EV makers to reduce costs, are leveraging their large purchasing volumes to resist price hikes. For NCM, downstream enterprises are taking cargoes primarily for immediate orders on a need-to-basis, indicating cautious procurement. For LFP, while power battery cell plants show a “strong willingness to replenish cargoes” and demand from the ESS market remains “brisk,” this has translated into volume stability rather than price increases. Large LFP enterprises are reportedly running at full-load production to meet this healthy demand, but they are doing so at stable prices.
This dynamic positions the battery cell manufacturing stage as the supply chain’s current cost buffer zone. These large, consolidated manufacturers are effectively acting as a firewall, absorbing the volatility from the raw materials market to shield their final customers. This demonstrates the immense negotiating power wielded by major battery producers and reflects the intense competition among cathode suppliers, who are compelled to sacrifice margins to secure volume and maintain market share. This situation, however, is likely unsustainable. Should the upward trend in lithium and precursor costs continue, the pressure on cathode producers will become acute, forcing them to either push for price increases or consider production curtailments.
The Lithium Rebound and Cobalt Rally
The foundational cause of the week’s market-wide volatility can be traced to the upstream markets for lithium and cobalt. After a period of decline, battery-grade LCE prices rebounded, with the average market price reaching RMB 72,500/T (approximately USD 10,206/T). The cobalt complex, already on an upward trend, gained further momentum. Cobalt sulfate prices “hiked up further” to an average of RMB 58,250/T (USD 8,200/T), and cobaltosic oxide “went upward” to an average of RMB 226,500/T (USD 31,883/T).
The drivers for these rallies are a mix of market sentiment and supply-side tactics rather than a simple surge in physical demand. The LCE rebound was catalyzed by a recovery in LCE futures prices, which encouraged producers to hold firm on offers. This was coupled with some genuine pre-holiday restocking from downstream players, but the report notes that overall downstream rigid demand was “not as good as before”. This suggests that producers, seeing an opportunity in the futures market, are actively trying to establish a new price floor.
The cobalt rally follows a similar logic. Cobalt sulfate and cobaltosic oxide enterprises are reportedly reluctant to sell cargoes, with many adopting a “wait-and-see attitude”. This reluctance is compounded by some producers cutting production due to raw material supply shortages. However, this tightening of supply is meeting resistance downstream, where acceptance of the current high prices is low, and buying interest is not active.
The price action in these key metals reveals a market driven as much by strategic positioning and financial instruments as by immediate supply-demand fundamentals. Producers of both lithium and cobalt appear to be strategically withholding supply and firming up offers to reverse the prior downward price trend. They are attempting to shift market psychology even as downstream buyers remain cautious and resistant. This creates a tense standoff between upstream suppliers and mid-stream consumers, fueling the short-term volatility that is now rippling throughout the entire battery ecosystem.
The Anode Market: Caught Between Rising Costs and Downstream Pressure
Stable Prices Mask Underlying Strain
In stark contrast to the volatility in the cathode complex, the anode materials market displayed complete price stability. Week-on-week prices for all reported grades of artificial and natural graphite anodes were unchanged. Mid-end artificial graphite held steady at an average price of RMB 26,500/T (USD 3,730/T), while low-end products remained at RMB 19,000/T (USD 2,675/T).
This stability, however, is not a sign of a healthy equilibrium. Instead, it masks a severe and escalating financial strain on anode producers. The report states unequivocally that prices for mid-end and low-end anode products are “hovering at the cost line”. This is the direct result of a two-sided squeeze: rising costs for anode feedstocks on one side, and relentless price pressure from downstream customers on the other. The fierce competition in the terminal new-energy automobile market has created a “strong willingness to bid down Lib anode materials price,” and anode producers are currently unable to resist this pressure.
The structural weakness that makes the anode sector so vulnerable to this margin compression is the high degree of product commoditization. The report points to a “serious homogenization phenomenon in mid-end and low-end Lib anode products,” which provides downstream enterprises with significant “bargaining power”. Unlike the cathode market, where distinct chemistries like LFP, NCM, and LCO serve different performance and cost niches, the high-volume mid-range anode market is a competitive battleground where price is the primary differentiator.
Consequently, the anode sector is currently functioning as the primary shock absorber for cost inflation across the entire battery value chain. While cathode producers are feeling the pressure, anode manufacturers are actively eroding their margins to the point of breaking even, simply to maintain operations and customer relationships. This represents a highly precarious financial position for many producers and points to a sector that is ripe for consolidation. In a prolonged environment of high feedstock costs, only the most cost-efficient producers or those with differentiated, high-performance products will be able to operate sustainably.
Feedstock Inflation Deep-Dive
The margin pressure on anode producers is being directly fueled by a broad-based inflationary trend across the entire suite of carbon-based feedstocks. Mid-sulfur calcined petroleum coke (CPC), a key material for graphitization, saw its price rise from RMB 2,300/T to RMB 2,350/T. This was supported by rising prices for its own precursor, green petroleum coke (GPC), and active buying interest from anode and aluminum smelter customers.
The needle coke market, crucial for high-performance anodes, was described as “stable-to-upward.” Producers were adopting “firming-up approaches” due to cost pressure from their own feedstocks. International crude oil prices have been ramping up, increasing the cost of oil slurry for oil-based needle coke. Simultaneously, the uptrend in coal tar pitch prices has raised costs for coal-based needle coke producers.
The coal tar pitch market itself is also hiking up. In the key North China region, the price for modified pitch increased from RMB 3,830/T to RMB 3,926/T. This was supported by a firming feedstock coal tar market and acceptable buying interest from downstream users.
The synchronized upward movement of GPC, CPC, needle coke, and coal tar pitch demonstrates that anode producers are not facing an isolated cost increase in a single input. Rather, they are exposed to a systemic inflationary trend across their entire raw material basket, much of which is tied to the broader energy and refining markets for crude oil and coal. This systemic cost inflation amplifies the severity of the margin squeeze, making the current situation for anode producers particularly challenging.
Electrolyte and Auxiliary Materials: Following the Lithium Trend
The electrolyte and additives segment of the market responded directly to the upstream volatility, acting as a clear conduit for passing on raw material cost changes. The average market price of lithium hexafluorophosphate (LiPF6), the primary conductive salt in most lithium-ion batteries, “floated up” to RMB 55,500/T (USD 7,813/T).
This price increase is a direct consequence of rising costs for its key feedstocks. The report explicitly cites the rebound in LCE and a partial rally in lithium fluoride (LiF) as providing “a bit strong cost support for LiPF6 market”. The price of battery-grade LiF itself rose to an average of RMB 135,000/T (USD 19,003/T). On the demand side, the market is also firming up, as downstream electrolyte enterprises have “gradually become more willing to replenish cargoes” ahead of the National Day and Mid-Autumn Festival holidays.
Key electrolyte additives also saw price increases. Vinylene carbonate (VC) “climbed” to an average price of RMB 48,000/T (USD 6,757/T), while fluoroethylene carbonate (FEC) increased from RMB 34,000/T to RMB 35,000/T (USD 4,927/T).
The price behavior in this segment demonstrates that, unlike the more complex anode and cathode markets where competitive dynamics can buffer or delay cost pass-through, the electrolyte salt market serves as a more direct and rapid transmitter of lithium price volatility. The pricing of LiPF6 is explained first and foremost by its input costs, with demand playing a secondary, albeit supportive, role. As such, the LiPF6 price can be viewed as a leading indicator of how fluctuations in the LCE market are being propagated downstream into the non-electrode components of the battery cell.
Outlook and Strategic Implications
Looking ahead, the market is poised for continued volatility and a deepening of the tensions observed this week. The short-term forecasts provided within the September 18 report suggest that the divergent trends are likely to persist.
The LCE market is expected to “fluctuate strongly,” signaling that the foundational source of the current instability will remain. This will continue to fuel uncertainty across the cathode complex, where LCO is forecasted to “fluctuate up,” NCM will “register fluctuations,” and LFP is expected to “consolidate narrowly”. Meanwhile, the anode market is “anticipated to keep low in the short term,” indicating no immediate relief from the intense margin pressure its producers are facing. In the electrolyte segment, LiPF6 is “anticipated to nudge up,” continuing to pass through the higher lithium costs.
From these trends, several strategic implications emerge for market participants:
- The Anode Margin Crisis: The most critical issue highlighted this week is the unsustainable financial pressure on anode producers. With prices fixed at the cost line while feedstocks appreciate, the sector is facing a severe margin crisis. This situation could accelerate market consolidation, forcing smaller, less-efficient players to exit. For downstream buyers, this poses a long-term supply security risk. While they currently enjoy significant bargaining power, the financial distress of their suppliers could lead to future supply disruptions or a reduction in investment in next-generation anode technologies.
- A Test of Cathode Pricing Power: The coming weeks will serve as a crucial test for NCM and LFP producers. If LCE and precursor costs continue their ascent, these producers will be forced to make a concerted effort to raise prices. Their ability to do so will be a clear indicator of the true balance of power between mid-stream material suppliers and the large, globally consolidated battery cell manufacturers. A failure to pass on costs would signal a further erosion of profitability for cathode makers, while success would indicate that the cost burden is beginning to be passed further downstream toward EV manufacturers and consumers.
- Bifurcated Risk for Procurement Strategy: For procurement managers at battery and EV companies, the market is presenting a dual-risk landscape that requires a nuanced strategy. The cobalt-LCO supply chain is demonstrating immediate price volatility risk, which may necessitate short-term hedging strategies or a shift in sourcing. In contrast, the anode supply chain is exhibiting signs of systemic financial distress, which is a longer-term supply security risk. This may require a different approach, such as establishing long-term pricing agreements, exploring vertical integration, or qualifying a more diverse set of financially stable suppliers to ensure the continuity of anode supply in the future.
Data derived from BAIINFO Big Data, open source data collected by webcrawlers, and use of machine learning algorithms proprietary to Delta 3 CoreTech LLC. All prices are converted at USD 1 = CNY 7.1039. This infographic is for informational purposes only and does not constitute investment or technical advice.
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