【SMM Analysis】China's lithium hydroxide production increased by 55% month-on-month in March; will it surpass the 30,000-ton mark in the following month?

In March, China's lithium hydroxide output reached 27,375 tons, an increase of 55% month-on-month and 15% year-on-year. Looking at the production by raw material type, in the month of February, the output of lithium hydroxide produced by pyrometallurgy reached 23,850 tons, while the output produced by the causticization method was 3,525 tons, with a month-on-month increase of 53% and 70% respectively, and a year-on-year increase of 25% and a decrease of 27%. The month-on-month growth rate of the causticization method was relatively fast, mainly because some enterprises using this method had previously operated at lower levels due to the continued price inversion between lithium hydroxide and lithium carbonate, however, after the Spring Festival, noticeable increases in contract manufacturing orders led to a rapid increase in production. Looking at the cumulative output, from January to March 2024, China's production of lithium hydroxide reached 67,517 tons, a 3% decline from the previous period, but the cumulative growth rate has narrowed compared to the -12% in February. Overall, the supply of lithium hydroxide in March was clearly increasing, with most pyrometallurgical manufacturers gradually resuming work and production after the Spring Festival. By March, with lithium carbonate prices rebounding and driving up the production in addition to the continuous reduction in industry inventory levels for lithium hydroxide itself, the price for lithium hydroxide also rebounded. Pyrometallurgy companies were generally more enthusiastic about production and shipping, while some companies using the causticization method also had increases in contract manufacturing orders and new production lines gradually coming online, which also contributed to higher output. By April, it is expected that the release of production from some new lines will continue to drive a further increase in the scheduled production of some companies, while the downstream demand from the high-nickel ternary sector will remain high. However, since the overall incremental growth in demand is expected to slow down compared to after the Spring Festival, this may have some impact on the production pace of certain companies to a certain extent. It is anticipated that China's lithium hydroxide production in April will reach 31,480 tons, an increase of 15% month-on-month and 35% year-on-year.