China lithium battery materials production to fall extensively in Jan 2024

Source: Mysteel

Nickel Sulfate

China's nickel sulfate production totaled 146,600 tonnes in December 2023, or 32,200 tonnes in Ni content, a monthly drop of 6.41%, based on Mysteel new survey samples. The production consists of 0% nickel briquette and nickel powder, 60.21% nickel hydrometallurgical intermediates, 29.03% nickel matte, and 10.2% secondary nickel.

The nickel sulfate production cut in December 2023 was primarily attributed to falling demand as a result of ternary precursor plants constantly reducing the production. Though producing nickel plate using nickel sulfate was profitable, the boost to the total demand was insignificant. As such, the nickel sulfate smelters actively reduced the production in light of oversupply and falling prices.

The production is estimated to fall 7.55% month on month at 29,800 tonnes in Ni. content in January 2024 as some smelters plan not to sell until after Chinese New Year holiday after finishing building stocks, which begins in February.

Cobalt Sulfate

China's cobalt sulfate production was 26,688 tonnes in December 2023, an increase of 0.77% MoM and 33.25% YoY. The cumulative production from January to December totaled 299,203 tonnes, a year-on-year decrease of 2.58%.

Looking back on December, the downstream players were not active in purchasing or making inquiries early in the month. When the prices hit a three-year low in late December, some players actively stockpiled on dips though the top-tier smelters refused to sell off. Therefore, the overall market shipment volume and production of  cobalt salt smleters were normal. At the end of the month, the prices of cobalt intermediate products remained stable, which led to a slight increase in cobalt salt prices. Downstream enterprises mainly relied on their in-plant stocks and purchased on rigid demand only. To sum up, the cobalt sulfate smelters maintained normal production through December 2023.

It is expected that the cobalt sulfate production in January 2024 will be 26,000 tonnes, a decrease of 2.58% month-on-month and a year-on-year increase of 20.32%.

As the Chinese New Year holiday approaches, the market's expectations towards the new year are not optimistic, with no long-term orders heard. Therefore, most downstream players still purchase on rigid demand, while small and medium-sized enterprises are more cautious in production scheduling and prioritize destocking. Hence it is expected that the overall cobalt sulfate production will fall slightly.

Manganese Sulfate

China's production of battery-grade manganese sulfate was 22,050 tonnes in December 2023, a decrease of 14.9% month-on-month and 11.8% year-on-year.

Although the demand from downstream ternary precursors decreased in December, some listed smelters slowed their production cuts to complete their annual production tasks, forcing some companies to build stocks for sales after the Chinese New Year holiday. However, the demand for manganese sulfate from ternary enterprises still showed a downward trend. Most manganese sulfate smelters produced based on the orders on hand.

The battery-grade manganese sulfate production is estimated at 12,000 tonnes in January 2024, a 45% decrease compared to the previous month. It is expected that downstream ternary precursor enterprises will further reduce their production in January, and the demand for manganese sulfate will continue to shrink. Some smelters may suspend the production for maintenance, and the overall production of manganese sulfate in January is more than likely to drop palpably.

Cobalt Chloride

In December 2023, China's cobalt chloride production was 14,353 tonnes, an increase of 0.04% compared with November, and a rise of 43.32% from 2022. The cumulative production from January to December stood at 151,594 tonnes, a year-on-year increase of 0.65%.

In December, the demand for electronic products was sluggish, and the overall transaction volume showed no improvement compared to last month. In addition, the frequent decline in cobalt sulfate prices made the smelters less active in producing. As such, the production rarely changed MoM in December.

China's cobalt chloride production is estimated at 14,353 tonnes in January 2024, unchanged from the previous month.

The overall demand for cobalt salt in January is projected to be weak, and smelters are with greater inventory pressure. Most market players believe that there will be no large-scale stocking before the Chinese New Year, but some maintain bullish expectations as it is rumored that some LCO factories may stock up. It is expected that cobalt chloride production will remain unchanged in January.

Lithium Carbonate

China's lithium carbonate production stood at 36,300 tonnes in December 2023, a monthly fall of 0.2%, based on Mysteel old survey sample. Specially, the production in Sichuan Production changed little, but some tollers in Jiangxi Province and some smelters in Qinghai Province reduced the production due to falling orders from end-market players and cooling weather respectively, which offset the production growth in other regions.

It is expected that China's lithium carbonate production will fall further by 4% month on month in January 2024, and the total production is estimated at around 40,000 tonnes based on Mysteel new survey sample that validates starting from January 2024.

The production cut is primarily attributed to falling downstream orders and some smelters undertaking maintenance approaching Chinese New Year holiday. In addition, the scrap-based production will also drop on overly high cost.

Lithium Hydroxide

China's production of lithium hydroxide lost 4.8% MoM at 20,300 tonnes in December 2024 as a result of constantly falling lithium hydroxide prices in the month, which slowed the smelters production pace.

The production is estimated at 19,100 tonnes in January 2024, down 5.9% MoM on the backdrop of approaching Chinese New Year holiday as well as poor demand from the ternary battery sector.

Ternary Precursor

China's production of ternary precursors was 57,800 tonnes in December 2023, a decrease of 2.61% month-on-month and a year-on-year decrease of 16.29%. The cumulative annual production was 786,900 tonnes in 2023, a year-on-year decrease of 6.61%.

Although the demand for ternary precursors decreased in December, some listed companies slowed down their production cut to complete their annual tasks, which built certain stocks for sale after Chinese New Year. Coupled with the continuous decline in market demand, the production in January dropped significantly.

The estimated production of ternary precursors in January 2024 is 49,600 tonnes, a decrease of 14.2% month-on-month and 15.33% year-on-year.

Ternary Cathode Material

China's production of ternary cathode materials reached 44,000 tonnes in December 2023, a decrease of 4.87% MoM and 6.84%YoY. The 2023 production totaled 569,600 tonnes, an increase of 3.09% year-on-year.

In December, the demand for ternary cathode materials from downstream battery companies continued to sag, weighing on the production constantly. Meanwhile, some battery companies planned to take holidays early, and the demand weakened even further.

The production of ternary cathode materials is estimated at 41,700 tonnes in January 2024, a month-on-month decrease of 5.28% and a year-on-year increase of 4.66%.

Cobalt Powder

China's cobalt powder production was 858.8 tonnes in December 2023, a month-on-month increase of 15.59% and a year-on-year increase of 16.53%. The cumulative production from January to December was 8,706.8 tonnes, down 0.52% on year.

As the Chinese New Year approaches, there was a high stockpiling demand for hard alloy on the market, and the quotation remained stable.Most companies had sufficient orders and were producing at full capacity.

The cobalt powder production is expected to be 880 tonnes in January 2024. At present, the downstream demand for cobalt powder is relatively stable. Most enterprises have sufficient orders, and some have also signed long-term contracts. It is expected that cobalt powder manufacturers will maintain normal production in January.

Electrolytic Cobalt

China's electrolytic cobalt production was 2,692 tonnes in December 2023, a month-on-month increase of 4.75% and a year-on-year increase of 123.77%. The cumulative production from January to December was 22,117 tonnes, rising 140.59% compared with last year.

In December, the overall demand for cobalt in China and abroad was flat, but the transactions slightly improved compared to the previous month. Most traders restocked for the Christmas holiday, and the downstream players in China also actively built stocks due to the New Year's Day and the approaching of Chinese New Year. As such, most smelters had sufficient orders and maintained high operating rates. Therefore, the total production of cobalt in December significantly increased.

China's electrolytic cobalt production is expected to reach 2,750 tonnes in January 2024, an increase of 2.15% month-on-month and 175% year-on-year.

The electricity cobalt market in January is expected to maintain momentum. Currently, China's cobalt market is basically stable. Although the demand is likely to be weak, the profit margin of electricity cobalt is higher than other products. The smelters' operating rates are projected to be high, leading to a slight increase in the production in January.

Co3O4

China's production of Co3O4 was 6,200 tonnes in December 2023, a decrease of 7.60% month-on-month and a year-on-year increase of 29.22%. The cumulative production throughout 2023 was 74,815 tonnes, a year-on-year increase of 12.19%.

In December, the sagging demand for electronics and bearish expectations from industry players remained unchanged. Meanwhile, there were few inquiries on the market, and the downstream LCO companies mostly demanded lower prices for Co3O4. But only one top-tier company which reduced the production obviously, and others maintained normal operations, resulting in a slight decline in the production.

The Co3O4 production is estimated at 6,750 tonnes in January 2024, a month-on-month increase of 8.87% and a year-on-year increase of 149.08%.

In January, with the rising of cobalt salt prices, the smelters have actively raised the prices. At the same time, the downstream LCO manufacturers have stockpiling plans as lithium carbonate prices show signs of stabilizing. The top-tier Co3O4 smelters produce based on the orders on hand. However, the overall demand is not as expected, and it is expected that there will be a slight increase in production of cobalt Co3O4 in January.

LMO

China's LMO production was 5,900 tonnes in December 2023, down 6.38% MoM primarily due to weakening cost support amid falling lithium carbonate prices, as well as sluggish downstream demand. In addition, some LMO manufacturers suspended the production for maintenance.

LCO

China's lithium cobalt oxide (LCO) production was 7,980 tonnes in December 2023, down 3.86% on month and up 73.10% on year. The cumulative production throughout 2023 was 78,275 tonnes, a year-on-year increase of 23.44%.

In December, the demand for electronics continued to be weak, with limited orders on the market. At the same time, the prices of cobalt and lithium raw materials fell to varying degrees, driving the smelters bearish. The shipment volume on the market decreased, and top-tier manufacturers delivered existing orders only, resulting in a slight decline in the operating rates.

It is expected that the production of LCO will remain stable in January as most manufacturers will prioritize destocking ahead of the Chinese New Year.

LFP

China's LFP production reported 115,700 tonnes in December 2023, down 15.54% MoM as the industry kicked off the dull season in December, with only several manufacturers maintaining the production.

It is expected that the production will see a mild increase of 6.58% MoM at 123,300 tonnes in January 2024 because the manufacturers will build stocks in advance before closing for Chinese New Year holiday, though the orders are expected to be flat still.

Anode

China's anode production fell 1.91% MoM at 97,500 tonnes in December 2023, down 7.23% YoY. The commissioning pace of new capacities was slow as the manufacturers were cautious on the back of flat end-market demand. In addition, some projects owned by downstream battery cell factories even stalled for lack of understanding of the anode market.

It is expected that the anode production will be down 3.9% MoM at 90,800 tonnes in January 2024.

LiPF6

China's LiPF6 production reported 10,960 tonnes in December 2023, a monthly fall of 10% for lackluster end-market demand that led to limited new orders. In addition, the manufacturers slowed their production ahead of the Chinese New Year holiday.

It is expected that China's LiPF6 production will drop further by 21.55% MoM at 8,600 tonnes in January 2024 mainly because the end-market demand is projected to stay sluggish. Moreover, more manufacturers will start to take Chinese New Year holiday, leading to lower capacity utilization rates, in addition to constantly falling raw material cost.

Electrolyte

The electrolyte production stood at 77,900 tonnes in December 2023, down 9.8% MoM. The manufacturers produced based on the orders on hand in light of weak end-market demand, which prompted the battery cell factories to destocked extensively.

Looking ahead, it is expected that China's electrolyte production will fall further by 19.11% MoM at 63,000 tonnes in January 2024 as a result of stubbornly poor end-market demand.

Separator

China's separator production stood at 1,323 million sq. m. in December 2023, down 5.97% MoM. And the production is estimated at 1,014 million sq. m. in January 2024, down 5.52% MoM.