China’s LCO material, battery exports to decrease in May as coronavirus hits demand

SHANGHAI, Apr 23 (SMM) – Demand for Chinese lithium cobalt oxide (LCO), a type of cathode material used to produce lithium batteries, could fall 40% in May, SMM estimates. This is against the backdrop of the coronavirus crisis overseas, which has led to steep declines in China’s export orders and prompted domestic smartphone makers to mull output cut.

Some major cathode materials producers in China view the potential risks in demand loss remain controllable as a slight rise in the consumption of electronic cigarettes and tablet computers may offset part of the decline in orders. 

SMM survey showed that most LCO plants slowed down operations from a month ago in April. There operating rates will continue to trend downward in May, pressured by decreased orders at battery plants. 

As the negative impact on demand from the pandemic outbreak overseas spread to Chinese producers of battery cells and cathode materials, China’s May export orders of LCO materials to Japan and South Korea are expected to shrink at least 30%, and the export orders of LCO batteries to India could slip about 30%, SMM assessed. 

Chinese smartphone giant Huawei sees its smartphone shipments to fall 20% this year, which will be the first year-on-year decline ever, to 190-200 million units. Due to uncertainty around the pandemic development outside China, Huawei warned declines in its smartphone shipments in the overseas market this year and planned to expand its domestic high-end smartphone market.

According to data from the China Academy of Information and Communications Technology (CAICT), overall mobile phone shipments in the Chinese market stood at 21.76 million units in March, down 23.3% on the year, Among this, 2G mobile phones accounted for 698,000 units, 4G devices took up 14.84 million units and 5G-enabled smartphones were 6.22 million units. 

Domestic mobile phone shipments in the first quarter amounted to 48.95 million units, 36.4% lower year on year, showed the CAICT data. 

In South Korea, it is understood that the Samsung Galaxy S20 lineup has only reportedly sold about 60% as much as the S10 series did last year.