The overall demand for lithium batteries for the 2014 cycle was steady despite some turbulences. The first half of the year saw a strong promotion for power banks. This was followed by a push for prismatic laptop batteries as well as popular large-screen handheld devices driven by Apple in the second half. These factors affected the supply and demand for cylindrical, prismatic and polymer battery markets. Duff Lu, Research Manager of EnergyTrend, a research division of TrendForce, stated that the steepest price decline in the fourth quarter of 2014 goes to polymer cells, with most models having price decline just under 5%. The price for prismatic cells, which is related to the production base period, also fell significantly in the short term, between 3~5%. Compared with the former two types, the cylindrical cells remained relatively constant. Although demands and prices will fall slightly in the first quarter of 2015, the long-term, year-long outlook for battery price is stable and chances of great fluctuations will be rare.
Supply for All Cell Types Stabilizes
Lu predicted that the cylindrical cell production will continue its decline. The priority for Panasonic, Sony, Samsung SDI, LGC, and other Korean and Japanese cell manufacturers is to shift production to electric car-related applications. Battery makers will seek to find a balance between electric car and consumer products as to avoid problems like overproduction and poor gross margin performance following low capacity batteries’ exit from the market. Such strategy will affect future prices.
Quality was still the main issue for polymer cells in the third quarter of 2014. As a result, the supply of smartphones batteries fell behind schedule in the fourth quarter. This caused a chain reaction that led to demand exceeding supply for the first-tier manufacturers. This was in stark contrast to polymer cells for laptops, which overall maintained its previous quarter’s production level in the fourth quarter.
Cell Prices Remain Low
Lu further noted that with Apple iPhone as the only bright spot in the 2014 fourth quarter market, major suppliers are now focusing on the supply and demand of polymer cells. China’s subsidy policy and expanding production means that the price war among polymer cells will continue. The factors behind lower prices also include the phablet phenomenon, leading to smartphone’s sizes matching tablets’. Both devices are moving toward similarity in battery capacity, thus allowing greater battery interchangeability between them. Therefore, polymer cell’s unit capacity price in the fourth quarter had a steady 4~5% drop.
The steady demand for electric car batteries encourages the growth of cylindrical cell production and slows down the price decline. Even though the demand for cylindrical cells in IT sector shrinks, their market demand ratio is boosted by high capacity cells. And with the base demand from the auto sector as a support, the price for cylindrical cells is stabilizing. The situation where 3.0 Ah cells are starting to become cheaper than 2.2 Ah counterparts just shows how quickly the lower capacity cells are leaving the market.
The price for prismatic cells so far has been volatile because these cells are at the start of mass production. EngergyTrend forecasts that prismatic cell price will stabilize when the market reaches equilibrium in supply and demand.