High Voltage: Lithium-ion is on fire… literally
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Each week our High Voltage column wraps all the news driving ASX battery metals stocks with exposure to lithium, cobalt, graphite, manganese and vanadium.
‘Lithium-ion batteries are catching on fire’ seems to be in the news again.
First, an explosion at a grid-scale battery facility in the US which left four firefighters injured, including three who were sent to a burn centre.
According to local press, the firefighters were inspecting the facility’s lithium-ion batteries when they were hit with an explosion.
Peoria Fire spokesperson describes force of the APS battery storage facility explosion. Hoping the four firefighters hurt have a speedy recovery. pic.twitter.com/cwI8Vx3d0Z
— Maria Hechanova (@MariaHechanova) April 23, 2019
Then this inferno at a Chinese car park:
Remember Samsung phones batteries sometimes accidentally started burning? In China a Tesla car battery suddenly burst in flames while in the parking. Fifteen firemen couldn’t extinguish it, two neighbor cars have caught fire too. pic.twitter.com/cbi5mNaERo
— Best of Aliexpress and China (@coolstuffcheap) April 22, 2019
The safety of lithium-ion batteries has always been a concern, but as the tech evolves these chemical firestorms are expected to become a thing of the past.
But it’s not always manufacturer error — sometimes people are just plain stupid.
Last week, it was revealed that someone actually fired a bullet from the passenger seat into a Model S battery pack that caught fire in 2014.
Producers Galaxy Resources (ASX:GXY) and Orocobre (ASX:ORE) are less than bullish on the state of the lithium market right now.
Galaxy shelved its search for a JV partner at the Sal da Vida lithium brine project due to “prevailing market sentiment and current weakness in short term contract prices for lithium chemicals”.
It blames the US-China trade war for poor sentiment in China, which has noticeably impacted lithium prices.
Since the drop Chinese lithium chemical prices had “remained reasonably steady” at lower levels, with current spot prices of US$11,500 per tonne reported for battery grade lithium carbonate and US$14,200 per tonne for lithium hydroxide.
Orocobre also says March quarter prices fell due to direct and indirect impacts of China’s prolonged market softness.
But while its gross cash margins fell 20 per cent from the previous quarter, Orocobre still boasts a very strong cash margin of 56 per cent or US$5258/tonne. So it’s not that bad.
For cobalt, things could be looking up.
Some say the beleaguered metal’s horror run is over as prices rebound for the first time in five months.
This time last year, prices were above $US40/lb. Since then, oversupply and sluggish demand has seen a painfully long period of price declines.
But we may have seen the worst of it. The international cobalt benchmark price rebounded for the first time in five months at the end of March, and the momentum continued into April, Roskill says.
“With cobalt prices unable to fall much further, it appears that some restocking is taking place,” says Roskill.
“This should push prices up.”
Vanadium prices have also plunged this year – but that isn’t such a bad thing, according to Mastermines boss David Gillam.
Most investors believe higher prices are better. What they don’t understand is that these higher prices prompt Chinese end users to substitute or bring on more domestic supply.
Gillam says that panic absolutely appears to be gone now as vanadium prices stabilise – and stability is crucial for the vanadium market.
“The best thing for vanadium is that we find the ground somewhere between $US10 to $US13 a pound and get some stability there,” he says.
“We see that as being very good for new entrants.”
Of the battery metals players on our list, 51 advanced, 67 remained steady and 74 lost ground this past week.
But with everyone pulling up stumps for the Easter weekend, company news was sparse.
It’s hard to find a winner that released anything of note, so let’s just assume every sentence starts with “up on no news” to save time.
Highlight included vanadium plays Coziron Resources (ASX:CZR), TNG (ASX:TNG), and Pursuit (ASX:PUR), up 30 per cent, 25 per cent, and 14 per cent respectively.
Fellow US-based lithium explorers Piedmont Lithium (ASX:PLL) and Reedy Lagoon (ASX:RLC) also jumped 17 per cent and 25 per cent.
Here’s a table of ASX battery metal stocks with exposure to lithium, cobalt, graphite, manganese and vanadium>>>
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop.