China's December 2023 ternary cathode material production was 53,181 mt, 5% down MoM and flat YoY. The 2023 total was 621,115 mt, down 5% YoY. In December, some cathode material suppliers that serve digital and power battery sectors used low-price shipments to maintain annual sales volumes. Power battery cathode manufacturers also reduced prices to compete for market share, challenging smaller producers. This led to a market split: financially strong enterprises sustained shipments, while smaller ones stopped production to clear inventory. EV market cathode production mirrored sales, generally declining as battery factories cut year-end stocks. A few firms bucked the trend, boosting production by advancing January export orders and through a minor rise in domestic orders. The share of mid-to-low nickel cathode materials fell, while that of high-nickel cathodes rose slightly.
In January 2024, the digital and EV batteries markets remain divided. Smaller producers keep reduced output or stay closed, whereas top firms in certain segments ramp up for February's demand, with scheduled production set to stay stable for now. January's ternary product orders in the EV market have exceeded low expectations. Demand rose due to December's low point and normal procurement after inventory digestion, shipping delays prompting overseas stockpiling, and better-than-expected domestic December car sales, slightly boosting ternary cathode demand. Leading battery cell factories see stable ternary product demand with a small rise in mid-to-high nickel cells while low-nickel cathode demand stays constant. Some second-tier factories expect a slight increase in mid-nickel battery cell demand. However, factories focused on overseas markets face weaker demand amid slower vehicle sales and product iteration issues.
On the supply side, January may see higher finished ternary cathode product stocks as some manufacturers boost production to cover February's holiday and maintenance downtime, pre-consuming February demand. Yet, expectations of falling lithium prices could alter downstream demand, risking order cuts from battery factories in January. China's production of ternary cathode materials in January 2024 is projected at 52,852 mt, down 0.62% MoM but up 30% YoY.
