【SMM Analysis】The post-holiday market is not yet clear, what do you think of lithium manganese oxide in 2024?

**In 2023, the lithium manganese oxide cathode material market in China experienced severe turmoil, with frequent price wars. Influenced by lithium carbonate prices, the price of lithium manganese oxide exhibited a "reverse U-shaped" trend throughout the year. The price of capacity-type lithium manganese oxide plummeted from a high of 137,000 yuan/ton at the beginning of the year to 54,000 yuan/ton in mid-to-late April, then rose to 98,000 yuan/ton in mid-to-late May, before steadily declining to 37,000 yuan/ton by the end of the year. Regarding production, compared to a low operating rate of 25% in 2022, the situation improved slightly in 2023, with an overall average operating rate of 39% for the year, mainly due to the relaxation of epidemic restrictions in 2023, leading to a relatively improved demand.**

**In 2023, China's lithium manganese oxide production totaled 91,500 tons, a 40% increase year-on-year. In the first quarter, downstream lithium manganese oxide battery manufacturers mostly adopted a small-volume, multiple-purchase rhythm for lithium manganese oxide cathodes. Due to the rapid decline in lithium carbonate prices, the rejection rate increased, and most small lithium manganese oxide enterprises found it difficult to bear losses, leading to shutdowns, with an overall operating rate of 20%. In the second quarter, driven by the rise in spot prices of lithium carbonate, downstream lithium manganese oxide battery manufacturers began panic buying, leading to a surge in orders for lithium manganese oxide cathode material manufacturers, with operating rates maintained at over 65% in May and June. In the third quarter, the continuous decline in lithium carbonate spot prices led downstream battery manufacturers to become increasingly cautious in purchasing lithium manganese oxide. At the same time, the terminal order situation for corresponding battery manufacturers was relatively weak, prompting some lithium manganese oxide companies to reduce prices for promotional sales, resulting in continuously declining transaction prices for lithium manganese oxide. In the fourth quarter, lithium carbonate spot prices remained sluggish until the end of the year, when the decline in prices slowed slightly. On the demand side, approaching the end of the year, battery manufacturers mostly focused on reducing production and destocking, resulting in lower enthusiasm for purchasing lithium manganese oxide cathode materials. Some battery manufacturers have entered a state of shutdown, so the operating rate of lithium manganese oxide has been maintained at a low level.**

**Future Outlook**

**From the perspective of supply and demand, the capacity of lithium manganese oxide cathode materials is sufficient, and it is in a phase of oversupply, so price fluctuations follow the trend of lithium carbonate in the later period. Now, with the decline in lithium carbonate spot prices, the price of lithium manganese oxide cathode materials has returned to the level of 2021, indicating that the substitutability of lithium manganese oxide batteries for lead-acid batteries has been further enhanced. At the same time, in the digital field, in 2023, floor scrubbers, smart wearables, and power tools all achieved positive growth. Therefore, SMM conservatively estimates that the lithium manganese oxide market will grow by 10% in 2024.**