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[SMM Analysis] investigation on the main downstream demand of Battery Grade Nickel Sulfate; reduction of production and difficult Terminal demand of Battery Factory
Apr 28,2020 17:57CST
The content below was translated by Tencent automatically for reference.

SMM4 28: although the time has almost entered May, but due to the overseas epidemic has not improved, European and American car companies are still in a state of general suspension. Since mid-March, the big three automakers have accepted a proposal from the United Auto Workers Union (UAW) to temporarily close more than 100 car and engine plants. Germany's big three Volkswagen, Daimler and BMW have also announced shutdowns in Europe. In addition to the European and American giants, eight Japanese carmakers, including Toyota, Nissan, Honda, Mazda, Suzuki, Subaru, Mitsubishi and Dafa, also announced a moratorium on domestic production.

As the automobile supply chain is difficult to recover, the supply and demand side of the automobile industry in Europe and the United States have not improved significantly. Moody's, the credit rating agency, has cut its 2020 global car sales forecast three times this year. Moody's expects global car sales to fall 14 per cent in 2020. Passenger car registrations in Europe hit their lowest level since 1990 in March, according to data released by the European Association of Automobile Manufacturers (ACEA).

The domestic market is also seriously affected by the epidemic, the new energy car market recession superimposed epidemic impact, the power battery industry is facing a severe test. The Power Battery Application Branch released the installed capacity of Chinese power battery enterprises in the first quarter of 2020. The installed capacity of power battery for new energy vehicles in China decreased by about 53.84% compared with the same period last year, about 5.68GWh.

According to SMM research, due to the weak demand in the terminal car market, most of the battery factories have signs of reduction in domestic and foreign orders. At present, the battery factory expects to seize more downstream orders through the price war, and the upstream material factory and the precursor factory also have the price war phenomenon. Although the market is not good, the battery factory does not dare to stop production, on the one hand, it is worried that the market share will be occupied by other shopping malls after the suspension of production, on the other hand, after the resumption of production, it is also difficult to recruit workers again; however, non-stop production means that they have to bear more labor, cost, inventory and other expenses, so at present, some battery factories have chosen appropriate layoffs.

Recently, most battery factories have the behavior of eliminating storage, some battery manufacturers said to SMM: the domestic power energy market in May is not optimistic, the impact of the epidemic in foreign markets has been gradually transmitted to China, although battery manufacturers have reduced production in May, but due to weaker downstream demand, manufacturers can not keep up with the decline in demand. Market participants speculate that there may be policies to help the new energy industry in the future, which will boost the entire industry chain.

SMM believes that the conduction impact of weak demand on the precursor plant is gradually apparent, and the precursor factory at the end of April has felt the impact of the foreign epidemic on May orders. Combined with the downstream demand of battery-grade nickel sulfate and the current total inventory of nickel sulfate plant, the high price of battery-grade nickel sulfate in the future is lack of stable support.

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