SHANGHAI, Jan 11 - China’s lithium carbonate output in December 2022 stood at 34,813 mt, a month-on-month decline of 5% but a year-on-year growth of 76%. Some enterprises resumed production in December after taking a hit from the COVID-19 pandemic and some large-scale plants stepped up production. This, coupled with more recycled battery scrap, bolstered output of lithium carbonate.

However, the overall supply dipped in December. Lithium carbonate output produced from salt lakes continued to fall due to the seasonal factor. Some lepidolite smelters in Jiangxi also reduced output and conducted maintenance due to environmental factors. In January 2023, enterprises affected by environmental issues have gradually resumed production. But most smelters using spodumene as raw materials undertook maintenance, resulting in a precipitous decline in output. Lithium carbonate output in January 2023 is expected to stand at 32,587 mt, down 6% month on month but up 71% year on year.

China produced 100,804 mt of lithium iron phosphate in December, down 16% month on month but up 63% year on year. On the supply side, some lithium iron phosphate plants lowered their production schedules amid weaker demand from battery manufactures and rapidly falling lithium salt prices, translating to a month-on-month decline in output.

Downstream demand looks set to weaken in the near term as automakers and battery manufacturers have destocked inventories. Lithium iron phosphate plants currently lacked purchasing interest due to the pessimism over the prices of lithium salt and iron phosphate, standing on the sidelines. The productivity of lithium iron phosphate plants has been subdued amid weakening demand and bearish raw material prices. Some of them would close for maintenance in January. This is expected to deepen output cuts.

Output of lithium iron phosphate in January 2023 is estimated to stand at 80,402 mt, a month-on-month drop of 20% and a year-on-year growth of 29%.