SMM Analysis On China October Lithium Hydroxide Production And November Forecast

According to SMM, China's lithium hydroxide production in October 2024 slightly decreased by about 1% MoM, but up 40% YoY.

Supply side, from the perspective of raw material types, the production reduction in causticizing lines is more significant. It decreased by 5%-10% MoM and about 50% YoY. The main reason is that since H2 2024, although the overall trend of lithium carbonate prices has been downward, due to favorable demand and support from the futures market, there have been several upward adjustments during this period. However, lithium hydroxide prices have continued to decline. According to SMM, recently, the price spread between non-battery-grade lithium carbonate and coarse lithium hydroxide particles has reached 5,000 yuan/mt or more. The economics of causticizing have continued to deteriorate, coupled with overall weak market demand, resulting in significant losses for producers. Besides some companies' new production lines ramping up lower-than-expected and maintaining low production, other companies' existing production lines have also seen slight reductions. On the smelting side, lithium hydroxide production remained basically unchanged MoM, but up about 43% YoY. Most companies produce according to orders, keeping production relatively stable. Some production lines switched from lithium hydroxide production to lithium carbonate, while some producers saw ramp-up of their new production lines.

Demand side, in the past two months, some ternary cathode materials companies have seen a slight increase in orders due to good sales of new car models overseas. However, most other companies have seen a downward trend in production due to reduced orders. Overall, the production of high-nickel ternary cathode materials declined in October and is expected to continue declining in November.

Import and export side, in September, China's lithium hydroxide export volume increased by 22% MoM and 15% YoY. Exports to South Korea and Japan accounted for 80.71% and 16.22% of China's total exports for the month, respectively, up 43.44% and 30% MoM, and up 24.3% and down 19.48% YoY. As October and November are the periods when the peak season fades and inventory adjustments end, coupled with no other factors boosting the overseas lithium hydroxide market, the export volume of lithium hydroxide is expected to decrease slightly in October and November.

In November, China's lithium hydroxide production is expected to remain relatively stable compared to October, mainly because most producers produce according to orders before year-end, keeping production stable.