(Yicai) March 4 -- Shares of Easpring Material Technology plunged despite the leading Chinese supplier of lithium battery cathode materials saying it has secured a three-year supply deal from South Korean battery giant SK On.

Easpring [SHE: 300073] ended 4.2 percent lower at CNY46.46 (USD6.38) a share in Shenzhen today. However, the stock has jumped 25 percent since the end of the Chinese New Year holiday on Feb. 5, reaching a near four-month high at one point yesterday.

SK On will likely buy 17,000 tons of various high-nickel and medium-nickel cathode materials from Easpring starting this year through 2027, the Beijing-based company announced late yesterday, citing a deal the pair inked on Feb. 28.

Easpring's factories in China and Finland will prioritize supply to SK On, while the Seoul-based company plans to make Easpring the preferred supplier for future battery plant projects, the Chinese company noted.

In addition, Easpring said it had agreed to discuss with SK On a possible deal to supply an additional 110,000 tons of lithium battery cathode materials from next year to 2028.  

SK On is a long-standing client of Easpring's lithium battery materials. In 2021, the pair penned an agreement for cathode materials, with SK On buying CNY1.9 billion (USD260.8 million) worth in 2022, but the figure has since declined.

A likely reason for that is the rapid plunge in lithium salt prices since 2022, with prices at only about 14 percent of their peak that year,

In 2023, Easpring announced it would invest EUR774 million (USD810 million) to set up its first overseas plant in Finland to meet fast-growing demand in the European electric vehicle market. The project's first phase, with an annual production capacity of 60,000 tons, is expected to go live next year.

Easpring holds a 70 percent stake in the factory, while Finnish Battery Chemicals Oy owns the rest.

Easpring has established long-term and stable ties with leading overseas battery makers, including SK On, LG Energy Solution, Samsung SDI, and Murata Manufacturing, according to its most recent financial report. Through these clients, it has entered the supply chains of Volkswagen Group, Hyundai Motor, BMW Group, Mercedes-Benz Group, and other leading global EV producers.

Editor: Martin Kadiev