[SMM Analysis] November Domestic Lithium Hydroxide Total Production Slightly Decreased MoM. What's the Outlook for December

According to SMM, in November 2024, China's lithium hydroxide production slightly decreased MoM by less than 3%, up 43% YoY.

Supply side, from the perspective of raw material types, the smelting end saw a significant reduction, down approximately 3% MoM. Some major smelting plants, during the recent low price period of lithium hydroxide, preferred to produce lithium carbonate on flexible production lines, leading to a certain reduction in the overall lithium hydroxide production. Besides, most other manufacturers produced according to orders, showing relatively stable performance overall. On the causticisation end, since there are currently few causticisation manufacturers in operation, November production was based on orders under tolling agreements and downstream demand, with no significant changes in total production.

Demand side, driven by good car model sales and the rush for installations of overseas ternary power batteries in the past two months, the market demand for medium and high-nickel ternary cathode materials has increased. As a result, the production of medium and high-nickel ternary cathode materials in November increased by approximately 10% MoM and up about 45% YoY. Orders in December are expected to show a slight increase as well.

Export side, according to customs data, in October, China's lithium hydroxide export volume reached 7,831.04 mt, down 38% MoM and approximately 24% YoY. Among them, exports to South Korea and Japan reached 5,770.75 mt and 1,695.96 mt, accounting for 73.69% and 21.66% of China's total exports for the month, respectively, down 43.76% and 17.78% MoM, and down 8.52% and 38.32% YoY. From September to October, overseas ternary cathode materials production decreased compared to July to August, coupled with overseas inventory buildup of lithium hydroxide, leading to a significant reduction in October imports. From the production schedule, November-December overseas medium and high-nickel ternary cathode materials production is expected to increase, with export volumes likely to rise slightly.

In conclusion, November showed a slight inventory buildup due to weak supply and small demand increase. From the December production schedule, some major lithium chemicals smelting plants have reduced orders under tolling agreements, coupled with increased motivation to produce lithium carbonate on flexible production lines due to good demand, leading to significant changes in lithium hydroxide market production. December production is expected to decrease by more than 15% MoM, with YoY growth of less than 25%, and the overall monthly supply-demand balance may be tight.