SMM, March 3:
Lithium Carbonate
In February 2025, SMM reported that domestic lithium carbonate production in China gradually recovered, up 2% MoM and up 97% YoY. Most upstream lithium chemical plants completed production line maintenance, and production gradually resumed. By raw material type, lithium carbonate derived from spodumene increased 4% MoM in February. Some lithium chemical plants resumed normal production levels after maintenance during the Chinese New Year holiday, leading to a steady increase in production. However, some plants remained under maintenance, and weaker demand in February led to a reduction in tolling business orders for some lithium chemical plants. Overall, lithium carbonate derived from spodumene showed a certain increase in output. Lithium carbonate derived from lepidolite also increased, up 7% MoM. The resumption of production by top-tier enterprises provided strong support for the total output of lithium carbonate derived from lepidolite, but non-integrated smelters continued to operate at relatively low levels due to cost pressure. Lithium carbonate derived from salt lake saw a slight decrease in output due to weather conditions, down 2% MoM. Recycled lithium carbonate output also declined, down 7% MoM, as lithium chemical plants underwent maintenance and holiday shutdowns during the Chinese New Year. In March, most lithium chemical plants are expected to return to normal production levels, and the gradual recovery in downstream demand is expected to drive upstream production. SMM forecasts that domestic lithium carbonate production in March will increase significantly, up 25% MoM.
Lithium Hydroxide
According to SMM, lithium hydroxide production this month reached its lowest level in recent times, down approximately 4%, but up 15% YoY. From a raw material perspective, smelting output decreased by about 5%, up 21% YoY. Production days were reduced due to the Chinese New Year holiday and maintenance schedules. Additionally, weaker-than-expected post-holiday demand recovery led some enterprises to maintain low production levels. Smelting output continued its previous downward trend, while causticisation enterprises operated at persistently low rates with a small production base. However, some enterprises with new production lines ramped up output slightly, contributing minimally to overall supply. In March, as most enterprises complete maintenance and production schedules normalize, lithium hydroxide production is expected to rebound, with growth exceeding 25%. However, due to sluggish demand growth, production enterprises are expected to shift lithium hydroxide production to lithium carbonate, resulting in overall production falling 5% YoY.
Cobalt Sulphate
In February 2025, cobalt sulphate production decreased by 5% MoM but increased by 9% YoY. The decline in February production was mainly due to the overlap of the Chinese New Year holiday in January and February, coupled with logistics and transportation constraints, which slowed the recovery of downstream demand. In March 2025, as the market gradually recovers and mainstream cobalt sulphate smelters resume operations, production is expected to increase.
Co3O4
In February 2025, Co3O4 production slightly declined compared to the previous month but achieved slight growth YoY. The production decrease was mainly attributed to the shorter calendar days in February and the impact of the Chinese New Year holiday. During this period, smelters focused on fulfilling previous orders. Additionally, the downstream LCO market was in the off-season, with slightly weaker demand and mediocre market transactions. By March 2025, downstream market demand is expected to recover, potentially increasing new orders and revitalizing the Co3O4 market. Production is expected to grow MoM and continue to increase YoY.
Ternary Cathode Precursor
In February 2025, China's ternary cathode precursor production decreased by 14% MoM and 6% YoY. On the supply side, most producers had stockpiled in advance in January. The Chinese New Year holiday in February resulted in extended shutdowns and restart cycles for precursor manufacturers, while downstream orders fell short of expectations, significantly impacting production. On the demand side, Q1 is typically an off-season, with relatively weak domestic and overseas downstream demand. Looking ahead to March, ternary demand is expected to remain relatively mediocre. However, with production fully resuming and more calendar days in March, ternary cathode precursor production is expected to increase by 13% MoM but decrease by 15% YoY.
Ternary Cathode Material
In February 2024, ternary cathode material production decreased by 11.6% MoM and 2.0% YoY. The overall industry operating rate was 33%, down from January. By series, 5-series ternary materials accounted for 22%, 6-series for 31%, and 8-series for 40%, with no significant changes in the proportions. On the demand side, the holiday season and the traditional off-season led to a noticeable decline in NEV sales at the beginning of the year. Battery cell manufacturers primarily focused on destocking, reducing battery cell production and weakening demand for ternary materials. In the small power and digital 3C sectors, concentrated production and stockpiling by battery cell manufacturers at the end of last year resulted in reduced production schedules and weak material demand in the new year. In March, driven by a recovery in end-user sales, ternary cathode material production is expected to increase by 12% MoM.
Iron Phosphate
In February, according to the SMM survey, domestic iron phosphate production decreased by 3% MoM but increased by 262% YoY. The shorter production time in February, with some enterprises conducting maintenance for about a week during the Chinese New Year holiday, led to a slight decline in production compared to January. The post-holiday market environment posed new challenges for the iron phosphate industry. Downstream LFP enterprises experienced some order cancellations, reflecting weak market demand. As battery cell and cathode manufacturers continued to digest inventory, iron phosphate enterprises adjusted production schedules accordingly to adapt to market changes. On the pricing front, February iron phosphate prices remained largely stable compared to January, with no significant fluctuations. Although the price of industrial-grade MAP, a raw material, increased at the end of the month, weak market demand made it difficult to achieve price increases for iron phosphate during negotiations. In March, LFP market demand is expected to gradually recover, and iron phosphate production schedules are expected to increase. Although some enterprises have scheduled maintenance in March, their impact on overall production will be limited. Iron phosphate production is expected to increase by 16% MoM and 90% YoY.
LFP
In February, China's LFP production decreased by 9.28% MoM but increased by approximately 184% YoY, with the overall operating rate falling to 47%. On the supply side, first- and second-tier LFP material manufacturers maintained stable production during the holiday period without significant production cuts. However, other small and medium-sized material manufacturers experienced varying degrees of production cuts or shutdowns. On one hand, rising iron phosphate prices without corresponding increases in processing fees exacerbated losses for some enterprises, leading them to halt production. On the other hand, downstream orders increasingly flowed to top-tier material manufacturers, causing some small and medium-sized manufacturers to lose orders and decide to suspend production. On the demand side, February was an off-season for the industry, with overall demand declining. Downstream battery cell production schedules slightly decreased, leading to a slight decline in material shipments and an increase in inventory. Looking ahead to March, downstream demand is expected to recover rapidly, driving a significant increase in LFP production. Additionally, processing fees showed an upward trend in February, with some material manufacturers implementing price increases, mainly for medium- and high-density products. According to SMM, processing fees for low- and medium-density products are unlikely to increase in 2025. To enhance bargaining power and achieve profitability, high-density products have become the industry's development trend.
LCO
In February, LCO production continued to decline, down 7% MoM. The decrease was mainly due to the holiday season and the shorter calendar days in February. In terms of market structure, the CR5 concentration ratio remained high at 85%. On the demand side, digital product demand weakened in February, and battery cell manufacturers slowed their stockpiling pace, leading to a decline in orders. In March, both supply and demand for LCO are expected to recover, with production increasing by 8% MoM.
SMM New Energy Research Team
Cong Wang 021-51666838
Rui Ma 021-51595780
Yanlin Lü 021-20707875
Disheng Feng 021-51666714
Yujun Liu 021-20707895
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