China CAM Production Likely to Rise Further despite Slowing Growth in July

SHANGHAI, Aug 17 (SMM) - In July, domestic output of ternary cathode materials (including NCM and NCA) stood at about 55,000 mt, up 5% MoM and 47% YoY. The growth was lower than estimate given a month ago. 

In terms of the terminal market, according to data from the China Association of Automobile Manufacturers, the output of new energy vehicles (NEVs) in July was 617,000 units, an increase of 4.6% month-on-month and 117% year-on-year.

The two mainstream routes of NEV battery batteries are ternary and LFP batteries. According to the data of the Power Battery Industry Innovation Alliance, the output of ternary power batteries in July was 16.6 GWh, a drop of 9.4% MoM and an increase of 107.7% YoY, accounting for 35.1% of the total output of power batteries. The output of LFP power batteries stood at 30.6 GWh, a growth of 33.5% MoM and 228% YoY, taking up 64.8% of the total. The production increment of LFP power battery constantly outperforms ternary power battery

Benefiting from the recovery of terminal demand from the pandemic outbreak, the output across the entire lithium battery industry chain has increased. The total output of cathode active materials (CAMs) in July was 159,100 mt, up 17% month-on-month, including 55,000 mt of ternary cathode material and 93,000 mt of LFP. This is highly related to the fact that downstream car companies have chosen LFP batteries for cost considerations.

The market situation in July was quite different from that in June. In June, the COVID lockdown was just removed, and some car companies rushed to meet their production guidance around the middle of the year. Hence the overall CAM production added 14% compared with that in May. Entering the second half of 2022, the recovery of the European market is still not very optimistic, while there is a certain increase in the US market. The domestic market, on the other hand, has maintained steady and mild growth. The market hence resumes rationality with regard to production, and the output of ternary cathode materials increased slightly.

The preference of low-nickel and high-nickel technology routes in ternary cathode materials has always been the focus on the market, which is subject to product cost and price fluctuations as well as breakthroughs in battery technologies. At present, medium-nickel single crystal high voltage and high nickel polycrystalline are the two mainstream technical routes for ternary cathode materials. The medium-nickel single crystal high voltage route can generally achieve a voltage of 4.4V, which enables its corresponding battery energy density to outperform than that of high-nickel batteries. Of course, there is also solutions like product blending.

In terms output by variety, the output of medium-nickel NCM materials in July accounted for about 55% of the total ternary cathode material output, and the high-nickel NCM took up 41%, with the rest going to low-nickel NMC materials and NCA. The output of the 5-series NMC materials dropped slightly compared with the previous month, while that of 6 and the 8-series rose slightly. The constant changes in the output of the 5 and 6-series is mainly caused by the downstream cell companies switching across different battery models. The output of the 8-series rose slightly due to the recovery of some overseas orders, which, however, still has great uncertainty.

According to SMM expectation, the sales of new energy vehicles are expected to reach 6.2 million units in 2022, and the overall supply of ternary cathode materials will still have room for improvement as some new capacities will be ramping up the production. It is expected that in August, the output of ternary cathode materials will total 59,454 mt, up 8% MoM.