(Yicai Global) Jan. 5 -- Huayou Cobalt’s stock price soared after the leading Chinese supplier of lithium-ion battery raw material agreed to supply 175,000 tons of ternary precursor materials for power batteries to Posco Chemical and its Chinese unit through 2025.

Huayou Cobalt’s shares [SHA: 603799] finished 6.1 percent higher at CNY58.98 (USD8.58) today, after climbing by as much as 7.9 percent before the lunch break.

Huayou Cobalt did not mention the value of the deals in its statement late yesterday, but based on current market prices they could be worth as much as CNY18 billion (USD2.6 billion).

The Jiaxing-based company and its units will supply about 160,000 tons of ternary precursor to Posco Chemical and another 15,000 tons to Zhejiang Posco New Energy Material, a joint venture in which Posco own 60 percent, per the deals.

Posco Chemical, a major South Korean supplier of cathode material for lithium-ion battery, counts LG Chem, Samsung SDI and SK Innovation as clients. Huayou Cobalt and LG Chem, another South Korean supplier of cathode material and power battery, also have joint ventures.

Ternary precursor is the main raw material to produce lithium-ion battery’s cathode material, accounting for about one quarter of the cost to make ternary power batteries.

Yesterday’s statements did not estimate the income the deals will bring to Huayou Cobalt, stating only that the two parties would negotiate and determine the actual purchase price of each transaction in a pre-agreed manner.

But based on the market price of ternary precursor of over CNY100,000 (USD14,549) a ton, the orders are expected to bring more than CNY18 billion in income.

The signing of long-term supply deals with Posco Chemical will deepen the cooperative relationship between the two, increase the market share of Huayou Cobalt’s products, strengthen the firm’s competitiveness in the field of lithium-ion battery materials, and positively impact its business performance, the Chinese company added.

Editor: Peter Thomas