SMM exclusive: China April metals output and May forecast 

Copper cathode
In April, SMM data showed that China's copper cathode output was 985,100 mt, a month-on-month decrease of 14,400 mt or 1.44%, and a year-on-year increase of 1.56%. The output was 20,100 mt higher than the expected 965,000 mt. The cumulative output from January to April was 3.9047 million mt, an increase of 222,200 mt or 6.03% year-on-year.
The reason for the month-on-month decline in output in April was that seven smelters underwent maintenance. The decline in output was not as large as expected due to four factors: 1. The sharp rise in copper prices in April widened the price spread between copper cathode and copper scrap, and the supply of blister copper and copper anode increased. According to our research, a large number of copper rod plants using copper scrap as raw material switched to produce blister copper and anode plates in April. By the end of April, some anode plate factories even asked customers to buy goods, which shows that the supply of anode plates was very abundant. This can also be reflected in the continued increase in the RCs and processing fees of blister copper and anode plates (as of April 30, SMM RCs of domestic blister copper in south China were 1,500 yuan/mt, up 450 yuan/mt from the previous month; domestic anode plate processing fee was 1,200 yuan/mt, up 400 yuan/mt from the previous month). Smelters could purchase enough raw materials to significantly reduce the impact of maintenance. 2. Sulphuric acid prices rose in April; gold and silver prices were at historical highs. By-products could make up for production losses, and smelters have little motivation to reduce production. 3. A smelter in east China gradually returned to normal production after completing technical transformation. 4. Due to the large discounts of copper rod made from copper scrap, some smelters even purchased copper rod made from copper scrap as raw materials to ensure production. We believe that the average operating rate of the copper cathode industry in April was 86.45%, a drop of 1.55 percentage points month-on-month; the average operating rate of large smelters was 90.99%, a drop of 3.62 percentage points month-on-month; the average operating rate of medium-sized smelters was 81.27%, an increase of 3.15 percentage points month-on-month; and that of small smelters was 66.48%, a decrease of 5.37 percentage points month-on-month.
In May, more smelters will undergo maintenance. According to our current statistics, 8 smelters will undergo maintenance, involving 1.64 million mt of smelting capacity. This will be the main reason for the decline in production in May. Nonetheless, due to the current ample supply of blister copper and anode plates, many smelters have sufficient raw materials, which will lead to a smaller-than-expected decline in production. In addition, a smelter in the south-west began to produce after its relocation.
Based on the production schedules of various companies, SMM estimates that domestic copper cathode output in May will be 977,100 mt, a month-on-month decrease of 8,000 mt or 0.81%, and a year-on-year increase of 18,300 mt or 1.91%. The cumulative output from January to May is expected to be 4.8818 million mt, a year-on-year increase of 5.18% or 240,500 mt. In May, the average operating rate of the copper cathode industry is estimated at 85.83%, a decrease of 0.62 percentage point from the previous month; the average operating rate of large smelters will be 89.38%, a decrease of 1.61 percentage points from the previous month; that of medium-sized smelters should be 82.10%, a rise of 0.83 percentage point from the previous month; that of small smelters will be 68.50%, a rise of 2.02 percentage points from the previous month. A large number of smelters will undertake maintenance in June, and domestic copper production is expected to decline.

Aluminium
According to SMM statistics, China's aluminium output was 3.515 million mt in April (30 days), up 4.98% YoY. In April, some aluminum smelters in Yunnan were still proceeding with production resumption, driving domestic aluminum industry's daily average output to around 117,200 mt. The share of aluminium liquid output rose by 1.4% MoM and 2% YoY to about 75.36%. According to SMM aluminium liquid ratio data, the domestic aluminium ingot volume in April was down by 2.77% YoY to around 865,900 mt.
Changes in production capacity: As of the end of April, the existing aluminium capacity was about 45.19 million mt, the operating aluminium capacity was around 42.62 million mt, and the operating rate grew by 4.31% YoY to 94.31%. The increase in operating capacity mainly came from the gradual production resumption in Yunnan. The improvement of electricity supply in Yunnan Province and high aluminum prices stimulated the second round of production resumption at local smelters. As of May 9, Yunnan's annual operating capacity was about 5.15 million mt, up about 660,000 mt from early March and up 480,000 mt from early April. In addition, one smelter in Xinjiang and one in Guangxi who shut down due to maintenance resumed production, boosting domestic aluminum operating capacity.
Output forecast: In May, the domestic aluminum operating capacity is expected to continue to rise, mainly as power supply in Yunnan Province recovered and local capacity steadily resumed. We still need to pay attention to the progress of resumption of the remaining production capacities in Yunnan. SMM expects additional 350,000 mt/year of capacity in Yunnan will reach full production in May, while other regions may change little. SMM predicts that domestic aluminum operating capacity may rise by 350,000 mt to 42.97 million mt at the end of May. The aluminum production capacity in May (31 days) is expected to be around 3.64 million mt. In addition, some loss-making enterprises were forced to halt their production as processing fees at aluminum billet factories in Guangxi remained low at the end of April. The domestic aluminum ingot volume may increase in May, and the share of aluminium liquid output may pull back to 74.5%. We need to pay attention to production resumption in Yunnan and downstream operating rate such as aluminum billets industry.

Alumina
SMM data showed that China’s metallurgical-grade alumina output stood at 6.679 million mt in April (30 days), and the daily average output was 222,600 mt/day, up 3,900 mt/day MoM. The total output in April was down by 1.51% MoM but up by 2.2% YoY. As of the end of April, the existing alumina capacity in China was 100 million mt, the operating capacity was 81.27 million mt, and the average operating rate stood at 81.3%.
Operating rate in Shanxi (+2.7% MoM to 72.9%): The growth was mainly contributed by a refinery who restarted in mid-March and resumed two production lines in April after suspension of one production line at the end of 2023 due to insufficient ore supply, boosting the operating capacity by 2.4 million mt. Operating rate in Henan (-3.3% MoM to 63.1%), mainly dragged down by some refineries who cut output by around 550,000 mt due to insufficient ore supply. Operating rate in Guizhou (+6.9% MoM to 83.4%): Several refineries restarted in mid-March after production suspension due to insufficient ore supply, affecting annual capacity of 600,000 mt. As of the end of April, the operating capacity rose to around 500,000 mt. In addition, a refinery reduced output in April due to insufficient ore supply, affecting annual capacity of about 150,000 mt. Operating rate in Hebei (remained at 88.7%); Operating rate in Guangxi (+1.4% MoM to 85.8%): The growth was mainly contributed by a refinery who recovered 24,000 mt of production capacity at the beginning of April after natural gas pipeline failures. In addition, insufficient ore supply in early April forced some refineries in Guangxi to shut down, around 500,000 mt of capacity had been resumed in late April. Operating rate in Shandong (remained at 92.5%).
May forecast: Recently, there are rumours that some mines in Shanxi would re-open. However, SMM learned that no local mines have resumed yet as of May 9. And, even if they do resume in the future the progress of production resumption may be relatively slow. A refinery in Sanmenxia resumed a production line in early May, boosting an annual production capacity of about 500,000 mt. In addition, alumina supply in Shanxi and Henan is unlikely to see significant increase; an alumina refinery in Shandong will end roasting and maintenance in May, which may lift output; there is still about 100,000 mt of production capacity to be resumed in Guizhou. The company said that production resumption depends on ore supply. Taken all together, SMM sees China’s daily average alumina output at 224,300 mt/day in May and total operating capacity at 81.87 million mt, up 3.5% YoY.

Overseas aluminum
According to SMM statistics, overseas aluminium output was 2.42 million mt in April (30 days), up 0.8% YoY. The overseas average aluminum production capacity utilization rate was 86.4% in April, up 0.4% MoM and 1.1% YoY. The overseas aluminum output totalled 9.743 million mt in the first 4 months of 2024, up 0.9% YoY.
By region, production in North America fell by 3.3% YoY in April. The New Madrid plant in the US completely stopped production in March 2024; Alcoa's Warrick smelter announced at the end of 2023 that it would restart a production line with capacity of 54,000 mt. SMM estimated that the plant's capacity utilization rate recovered to around 75% in April 2024.
In South America, local production rose by 4.7% YoY to 126,000 mt as Alcoa's Alumar plant has been restarting slowly since April 2022. SMM estimated that the plant's capacity utilization rate had recovered to around 70% by the end of April.
Russia's total aluminum production increased by 3.1% YoY to 340,000 mt due to the restart of UC RUSAL's Taishet plant. According to SMM statistics, the Taishet plant produced about 18,000 mt in April, with a capacity utilization rate of about 52%.
In Europe excluding Russia, production rose by 0.2% MoM to 296,000 mt due to the shutdown of the Neuss plant in Germany. The other three smelters in Essen, Hamburg and Voerde reduced production since 2021 due to factors such as rising energy costs, and by the end of 2023, their operating efficiency only stood at 30%. The above three smelters began to slowly resume production in April 2024. In addition, the production resumption at San Ciprian plant in Spain still faced difficulties, and the operating efficiency only stood at 6%. Alcoa had launched a potential sale process in the first quarter and the bidding process was expected to be completed by June 2024.
Significant output increase occurred in Asia, especially in Indonesia. The smelter of Indonesia Huaqing Aluminum was put into operation in 2023, and the existing capacity stood at 500,000 mt in 2024. SMM estimated that this smelter’s production in April was about 20,000 mt, with capacity utilization rate of 50%.
Smelters in other regions maintained steady operation. However, India's aluminum output rose by 1.8% YoY to 338,000 mt in April.

Primary lead
In April 2024, the domestic refined lead output was 291,500 mt, down 0.74% month-on-month and 7.41% year-on-year. The cumulative output from January to April 2024 fell by 4.38% year-on-year. Production capacities of enterprises involved in the survey totalled 6.0063 million mt in 2024.
Both maintenance and output recoveries occurred at refined lead smelters in April. Smelters in Hunan and Yunnan resumed production after maintenance. At the same time, since April, the price of lead has been fluctuating upward, and the price of by-product silver has hit a historical high. The production enthusiasm of smelters has improved, bringing an output increase of more than 10,000 mt. Medium and large enterprises in Henan, Hunan and Yunnan, most of which were producers of delivery brands, underwent maintenance, resulting in a production reduction of nearly 20,000 mt. The total output changed little.
The maintenance at more refined lead smelters, combined with tighter supply of raw materials such as lead concentrate, will reduce refined lead output further in May. The smelters in Hunan, Yunnan and other areas that were overhauled in April have not yet resumed, and enterprises in other regions have started maintenance. Meanwhile, TCs of lead concentrate hit a record low. SMM data showed that TCs for Pb 50% low-Ag lead concentrate were 600-800 yuan/mt with metal content, 50 yuan/mt with metal content lower than in April. TCs of high-Ag lead concentrate were zero to negative figures, reaching a low of -700 yuan/mt with metal content. The lead concentrate supply will restrict lead ingot output. SMM expects refined lead production to fall slightly in May to 287,000 mt.

Secondary lead
The output of secondary lead in April 2024 was 374,400 mt, down 0.98% from March and up 4.35% year-on-year. The cumulative output of secondary lead from January to April 2024 was 1.28 million mt, down 5.93% year-on-year. The output of secondary refined lead in April 2024 was 327,000 mt, a decrease of 0.9% from March and an increase of 6.87% year-on-year. The cumulative output of secondary refined lead from January to April 2024 was 1.10 million mt, a decrease of 6.6% year-on-year.
The demand for replacing battery scrap was low in April due to the traditional off-season. The limited amount of scrapped battery led to tight supply. The purchasing offers of secondary lead smelters were raised for many days, and recyclers were bullish and reluctant to sell, reducing shipments. The raw material inventory of secondary lead smelters dropped significantly, and many smelters across China reduced production. In addition, the "reverse invoicing" policy for the recycling industry was announced in late April. The increase in taxes and fees raised the recycling costs of battery scrap traders. This also prompted secondary lead smelters to raise their purchasing prices. In May, the continuous increase in procurement costs increased the financial pressure of some smelters. At the same time, several other large smelters stopped production due to equipment failure and environmental protection certificate renewal issues. SMM expects the output of secondary refined lead to decline by 31,400 mt to 295,600 mt in May.

Refined zinc
In April 2024, SMM data showed that China's refined zinc output was 504,600 mt, a month-on-month decrease of 20,900 mt or 3.99%, and a year-on-year decrease of 6.56%. The cumulative output from January to April was 2.1 million mt, a year-on-year decrease of 0.47%, basically in line with expectations. Domestic zinc alloy production in April was 95,500 mt, an increase of 1,100 mt from the previous month.
In April, the output of domestic smelters declined, mainly due to routine maintenance of smelters in Xinjiang, Yunnan, Gansu and other places, which resulted in a significant decrease in output. In addition, there was a certain decrease in output due to equipment maintenance and raw material problems at smelters in Henan, Shaanxi, Yunnan and Hunan. The smelters in Inner Mongolia, Hunan, Sichuan, Yunnan and Qinghai resumed after maintenance, contributing a certain increase in output.
SMM predicts that domestic refined zinc production in May 2024 will increase by 26,800 mt from the previous month to 531,400 mt, a year-on-year decrease of 5.86%, and the cumulative production from January to May will be 2.631 million mt. The output increased in May, mainly due to the production resumption after maintenance and increase in output at smelters in Gansu, Xinjiang, Liaoning, Hunan, Henan and Sichuan. The release of new production capacity in Hunan will also contribute a certain increase in production; but there will be a certain decrease in output due to raw material problems and equipment maintenance in Shaanxi, Inner Mongolia, Hunan and other places.

Refined tin
According to SMM survey, domestic refined tin production reached 16,545 mt in April, a month-on-month increase of 6.36% and a year-on-year increase of 10.64%. In Yunnan, although a smelter suspended the production of refined tin in April due to handover issues, another company achieved a small increase in production. However, this company has no long-term plan for production increase, and its subsequent production will depend on the supply of raw materials. Overall, the output of tin ingots in Yunnan in April was basically the same as that in March; in Jiangxi, the output of some smelters increased significantly compared with March thanks to the abundant supply of scrap in the market recently. However, in Inner Mongolia, a smelter experienced a slight reduction in production due to tin ore supply problems. A smelter in Guangxi also saw a decline in tin ingot production due to equipment maintenance. In contrast, most smelters in Anhui and other regions maintained normal production in April. In May, most smelters in Yunnan are expected to maintain normal production, but the resumption time of the company that has stopped production due to handover issues is unknown. In Jiangxi Province, most smelters plan to maintain normal production, and a few companies are expected to achieve a slight increase in output. A smelter in Hubei Province is planning to restock materials and resume production considering the sufficient supply of scrap in the market. Most smelters in other regions have basically maintained normal production. Domestic tin ingot production is expected to be 17,015 mt in May 2024, up 2.84% month-on-month and 8.65% year-on-year.

Refined nickel
China’s refined nickel output stood at 24,700 mt in April, down 1% MoM, but up 39.8% YoY. The slight decrease was in line with expectations. Affected by equipment maintenance, the output of some nickel producers has not yet fully recovered in April. A few nickel companies have not achieved production targets due to raw material shortages.
It is estimated that the domestic refined nickel output will rise to 25,800 mt in May. According to SMM research, manufacturers were willing to produce refined nickel amid rising nickel prices in April, and some continued to ramp up production. The producers in Northwest China that had suspended or slashed production are expected to restore their production in May. The new nickel plate production lines commissioned in early 2024 are still increasing production. In summary, the refined nickel production in May is expected to rise 4.45% MoM.
NPI
NPI output in China stood at 26,700 mt in nickel content in April (-3.4% MoM) or 647,000 mt in physical content (-2.15% MoM). High-grade NPI was about 205,000 mt in physical content, or 20,200 mt in metal content (-9,400 mt in metal content), and low-grade NPI at about 442,000 mt in physical content, or 6,500 mt in metal content. Affected by Indonesian Lebaran, RKAB approval slowed down. Concerns about Indonesian nickel ores lingered, elevating nickel ores prices. Therefore, NPI smelters held sluggish purchase appetites and produced on stocks. In addition, as high nickel ore prices undermined the profit recovery, some smelters shut down for maintenance with an unclear time for production resumption. Spring environmental protection inspections in some regions caused local output to drop slightly. Affected by bearish sentiments from declining stainless steel prices in March, April saw pessimistic future orders for stainless steel. Integrated steel mills adjusted their product structure to cope with market fluctuations. The reduced output of 300-series stainless steel resulted in a slight decline in NPI output by integrated enterprises.
It is estimated that the domestic NPI output will be 27,600 mt in metal content in May, up 3.2% MoM. According to SMM research, some domestic smelters are expected to resume production in May, but the resumed output will be limited due to high costs. The current demand for stainless steel drove up NPI output by integrated steel mills.
Indonesian NPI
Indonesia produced 111,900 mt (Ni content) of NPI in April, down 5.08 % MoM but up 2.9% YoY. The output totalled 465,600 mt in nickel content in January-April, up 14.7% YoY. Supply side, despite no public data on new RKAB quotas in April, the approval is slowly advancing according to SMM research. The supply of Indonesian nickel ores increased slightly. Demand side, Indonesian NPI smelters were more active to purchase nickel ores due to continuously rising NPI prices. However, the current premium of laterite nickel ores is still high amid tight supply. With more laterite nickel ore supply in May, Indonesian NPI production is expected to gradually rise to a certain extent.
Nickel sulphate
In April, China’s output of nickel sulphate was 34,500 mt in metal content, or 156,600 mt in physical content (+1.25% MoM,+14.21% YoY). The output was lower than expected due to raw material shortage. Raw material arrival delays caused by temporary customs inspections led to a limited increase in nickel sulphate output.
In May, dragged by continuing raw material shortage and losses, China’s output of nickel sulphate is expected to be 33,200 mt in metal content, or 150,900 mt in physical content(-3.63% MoM, +1.40% YoY).

Manganese Sulphate (Battery Grade)
In April 2024, China's production of battery-grade manganese sulphate reached about 17,000 mt, up 1.19% MoM. Ternary precursor producers, despite having robust recycling systems, maintained manganese sulphate purchases to meet essential needs. In April, issues at manganese ore ports led to traders' reluctance to sell, driving up manganese ore prices. Together with high prices of sulfuric acid and caustic soda, the cost of producing battery-grade manganese sulphate rose. Production halts in Guizhou left only Guangxi factories operating on a production-to-sales basis, maintaining a tight supply-demand balance.
In May, prices for battery-grade manganese sulphate are expected to stay firm due to high raw material costs. Orders from downstream precursor companies should remain stable. Some enterprises, having moved from Guizhou to Guangxi, are starting normal production. Additionally, ongoing R&D in sodium-ion and LMFP batteries in downstream sectors is likely to positively impact the market outlook for battery-grade manganese sulphate. Market conditions suggest that production of battery-grade manganese sulphate will likely increase slightly in May, with an estimated output of around 20,000 mt in physical content, up 17.60% MoM.

Electrolytic manganese dioxide (EMD)
SMM data shows that in April 2024, China's electrolytic manganese dioxide production was 15,600 mt (including 1,800 mt for LMO battery, 9,400 mt for alkali manganese battery, and 4,400 mt for carbon zinc battery), an increase of 6.25% month-on-month and a year-on-year increase 4.0%. The output of EMD for LMO battery rose slightly, while that for the other two types of batteries changed little. This is because recovering LMO market brought restocking activity. The weather warmed up in April. Higher temperatures could affect the output of primary batteries as electrolyte may leak out. Therefore, there are fewer new orders for EMD used in carbon-zinc and alkali-manganese batteries, preventing its output from growing.
In May, LMO demand will stabilize after April’s recovery, so the output of EMD for LMO battery will stop growing as well. Demand for EMD used in primary batteries will remain stable, so will its production. SMM sees China's electrolytic manganese dioxide production at 16,000 mt in May.

Trimanganese Tetroxide (Mn3O4)
In April 2024, China's production of Mn3O4 totaled 9,900 mt, comprising 5,100 mt of electronic-grade and 4,800 mt of battery-grade material, up 6.45% MoM and up 4.98% YoY. The rise in production can be attributed to two main factors: advancements in manufacturing technologies and growing demand in both the electronics and battery sectors.
1. In April, as LMO cathode manufacturers entered their minor peak season, there was an increase in downstream demand. This surge led to heightened procurement of battery-grade Mn3O4, subsequently prompting Mn3O4 producers to boost their scheduled production.
2. Due to its cost advantage over electrolytic manganese dioxide (EMD), many LMO manufacturers favor Mn3O4 to reduce expenses and increase competitiveness. This preference is gradually expanding the market for Mn3O4.
Looking ahead to May 2024, with intense market competition and high prices for EMD, the market share for Mn3O4 is expected to increase, which will likely boost production enthusiasm and capacity. However, due to a slowdown in LMO demand, a significant rise in production from April levels is not anticipated, maintaining a production-to-sales approach. Thus, total Mn3O4 production in May is projected to reach about 10,400 mt.
High-carbon ferrochrome
SMM data shows that in April 2024, the national high-carbon ferrochrome output further increased, breaking through the historical peak to 736,800 mt, an increase of 11.43% MoM and 32.47% YoY. Among them, the output in Inner Mongolia was 492,500 mt, an increase of 3.42% from the previous month; the output in Guizhou was 39,500 mt, an increase of 50.92% from the previous month. Stainless steel consumption recovered with the arrival of peak season. Bid prices of major stainless steel mills came earlier than usual and were significantly raised. Improved profit margins motivated ferrochrome plants to put new capacity into operation or resume idled capacity.
Heading into May, stainless steel mills raised their scheduled production further, boosting raw materials demand. This, coupled with high bid prices, will keep ferrochrome plants passionate about production. In particular, power tariffs in Sichuan fell with the passing of dry season, encouraging local ferrochrome plants to resume production across the board. SMM estimates domestic high-carbon ferrochrome output at 750,200 mt in May.

Stainless steel
According to SMM, the domestic stainless steel output totalled 3.1663 million mt in April, down 0.37% MoM but up 8.99% YoY. Specifically, the output of 200-series stainless steel was 865,700 mt (+22.91% MoM), versus 1.6385 million mt for 300-series (-3.16% MoM) and 662,100 mt for 400-series (+7.69% MoM).
In early April, stainless steel prices extended declines. Some stainless steel mills were scheduled to cut production in April amid losses and ferronickel shortages. However, in mid-April, as terminal demand for stainless steel recovered, 200 and 300-series stainless steel prices rose largely, backed by fewer stainless steel arrivals and tight nickel ore supply. Due to improved profits and growing downstream orders, steel mills cut less production than expected, especially those in East China. A steel mill in Zhejiang restored 20,000 mt of 300-series stainless steel capacity in early April, and one in Jiangsu dramatically ramped up production by upgrading production lines. Due to strong consumption of 400-series stainless steel in March and April, steel mills switched to 400-series stainless steel production lines, involving 40,000 mt of capacity.
In May, social inventory accumulated again after the holiday. Stainless steel transactions were bleak amid weakening downstream demand and rising high-grade NPI prices. However, growing costs provided strengthening support for stainless steel prices. Therefore, short-term stainless steel prices may hold stable. Nevertheless, stainless steel mills still increase production schedules. It is expected that the domestic stainless steel output will increase by 9.18% MoM, with 300-series stainless steel production up about 90,000 mt. A stainless steel mill in Central China is expected to restart in mid-May, bringing 20,000 mt output of 200-series stainless steel. The output of 400-series stainless steel is estimated to decrease due to escalating losses caused by growing high-carbon ferrochrome prices.

EMM
SMM data shows that China's EMM output in April 2024 was 97,400 mt, a month-on-month decrease of 3.76% and a year-on-year decrease of 4.53%. Some EMM producers remained closed for cost reason. A shorter month also contributed to lower output. Downstream, the overall stainless steel production declined in April, with notable drop in the 300 series, but steel mill demand for EMM was modest.
Heading into May, the EMM industry on the whole was still basically operating at 70% of the capacity. We expect May production to be flat from April’s level.
SiMn alloy
According to SMM data, China's total output of SiMn alloy in April 2024 was 778,000 mt, down 3.77% MoM and 13.15% YoY. Extended production cuts in south China where costs rose, combined with a shorter month, contributed to the monthly output reduction. Producers in Inner Mongolia maintained high production, and those in Ningxia, though sensitive to prices, basically kept production unchanged.
Heading into May, production was maintained in low-cost regions, such as Inner Mongolia. However, rising costs should somehow inhibit production growth. SMM sees domestic SiMn alloy output little changed from April at 773,000 mt in May.

Silicon metal
China’s output of silicon metal was 358,700 mt in April, down 8,000 mt or 2.1% MoM but up 23.2% YoY. The output totalled 1.4159 million mt in January-April, up 257,100 mt or 22.2% YoY.
The spot price of silicon metal accelerated declines in March. Although the drop narrowed in April, the market maintained procurement based on demand amid a bearish outlook. Some small silicon companies with weak risk resistance cut production in April amid losses, mainly in Yunnan, Gansu and Shaanxi. With advantages in the industrial chain and corporate strategies, leading silicon enterprises maintained stable operating rates. Specifically, large factories in Xinjiang gradually ramped up production in April. Their output hit a historical high in early May after technical upgrading.
In May, few companies resumed production in Sichuan, restricted by costs and profits. Some took a wait-and-see stance, waiting for the rainy season. The restarting manufacturers in Yunnan were concentrated in Baoshan, while silicon companies in Dehong Prefecture and other places had no plans to resume or increase production in May. Most medium and large-scale silicon companies in north China maintained normal production. As leading companies ramp up production, silicon metal output is expected to increase to 370,000 mt in May.

Polysilicn
Polysilicon production in April was 181,200 mt (+5.8% MoM) in China, mainly thanks to capacity ramp-up of new production lines. In May, many polysilicon companies were shut down for maintenance, including some first-tier factories, affecting output of more than 5,000 mt. However, due to capacity ramp-up of Tongwei Baoshan and Daquan Inner Mongolia Phase 2, production in May may still increase, but the growth rate will slow down significantly.
PV modules
According to SMM statistics, domestic module production reached 55.1GW in April, an increase of 1.29% from March. The growth of module production slowed down significantly. In March, module production was obviously in surplus, and the growth of module inventory was significant. Coupled with the decline in module prices, module companies were under pressure and began to reduce production in April. However, the overall market demand is still slightly weak, and module production may stabilize in May.
PV cell
The actual solar cell capacity in April was 61.88GW, a month-on-month increase of 9.07% and a year-on-year increase of 34.52%. In April, N-type cell production reached 44.05GW, accounting for about 71.18% of the total output. In April, the downstream demand for topcon cells reached more than 42GW. Both supply and demand increased. Pre-holiday inventory was well controlled, while P-type cell production in April stood at 17.83GW, demand for P-type cells was weak in April and inventory growth was significant, and demand is expected to weaken further in May.
PV glass
According to SMM statistics, the monthly domestic PV glass production in April was 2.3658 million mt, a slight decrease of 2.89% from March. The number of production days was reduced by 1 day compared with March. However, as previously commissioned production lines ramped up production, the supply began to increase. Therefore, although the output decreased month-on-month, the decrease is relatively small. A total of 4 domestic furnaces were put into operation in April.
DMC
According to SMM statistics, China’s DMC production in April was 186,300 mt, down 4.66% MoM. The operating rate of the industry in April was 77.9%. The production reduced in April as some producers showed stronger intention of suspending production due to shrinking profits. In April, three enterprises suspended production, leading to declining operating rate. The production will improve slightly in June as enterprises have no new maintenance plans.

Magnesium ingot
SMM data shows that China's magnesium ingot production in April 2024 was 64,286 mt, a month-on-month decrease of 1% and a year-on-year decrease of 8%. Oversupply sent magnesium prices all the down since early March. In order to ease financial burden, magnesium producers cut prices repeatedly. However, these price cuts not only failed to stoke the buying appetite, but rather, they exacerbated the price downturn. Consequently, some producers began to shut down in late March for financial and cost concerns, and they remained closed until mid to late April.
Some producers resumed production in early May. The delivery of some orders was delayed to early May. Stocking by domestic and overseas buyers before and after the Labour Day holiday allowed magnesium prices to rebound at the beginning of May. However, even with cost support, magnesium price rebound could be short-lived as the current demand is inadequate to absorb the market supply. In order to mitigate risks from potential price pullback, some producers may plan maintenance ahead. SMM sees domestic magnesium ingot production at 73,000 mt in May.

Magnesium alloy
SMM data shows that China's magnesium alloy output in April 2024 was 30,680 mt, a month-on-month increase of 15.6% and a year-on-year increase of 15.1%. Downstream enterprises and end users restocked as needed. Some magnesium alloy producers ran at full capacity. The overall demand for magnesium alloy was sluggish, affected by weak domestic economy.
Considering that soaring aluminum prices have significantly highlighted the cost performance of magnesium alloy, magnesium alloy orders should slightly improve. SMM sees domestic magnesium alloy production at 30,000 mt in May.

Magnesium powder
SMM data shows that China's magnesium powder production in April 2024 was 5,976 mt, a month-on-month increase of 22% and a year-on-year increase of 8.7%.
The output of magnesium powder shrank slightly in April. Affected by various factors such as the lack of orders at magnesium powder companies and the fluctuating magnesium ingot prices, which caused a strong wait-and-see attitude among downstream companies, the output of some magnesium powder companies has decreased. A large magnesium powder company said that due to the sluggish domestic economic situation, thin steel mill profit, volatile price of magnesium ingots, downstream purchasing attitude of magnesium powder is more cautious. Considering that low-priced magnesium ingots may stimulate an increase in orders for magnesium powder, SMM expects domestic production of magnesium powder to remain at 6,000 mt in May.

Titanium sponge
SMM data shows that China's titanium sponge production in April 2024 was 21,000 mt, and the production in that month increased by 5% month-on-month.
In April, some large titanium sponge manufacturers gradually released their new production capacity, while the rest of the companies started operations basically stably. In April, the overall demand for titanium sponge market was improving, with military demand overall being relatively stable, and demand for civilian titanium materials increasing. With the support of orders in hand at titanium sponge companies, titanium sponge prices have been running smoothly for the time being. Considering that some titanium sponge companies continue to release new capacity, titanium sponge production is expected to increase to 22,000 mt in May.

Pr-Nd alloy
In April 2024, domestic Pr-Nd alloy output was 5,866 mt, a month-on-month increase of 2.13%. End-user demand improved steadily after heading into the second quarter, boosting Pr-Nd alloy demand and driving down stocks at alloy producers rapidly. Some alloy producers saw output growth in April. The rare earth market embraced peak season.
Backed by robust orders on hand, magnetic material production is on track to stay high in May. However, profit growth may be lower than expected amid fierce competition. Pr-Nd alloy production is poised to sustain growth in May, driven by strong demand.

Pr-Nd oxide
The domestic production of Pr-Nd oxide reached 5,967 mt in April 2024, up 0.37% month-on-month, with significant growth mainly seen in Guangxi.
According to the SMM survey, in April, some separation plants in Jiangxi suspended production for maintenance, resulting in a slight decrease in local Pr-Nd oxide output month-on-month. Although the import volume of rare earth ore from the US declined, some separation plants still had unconsumed raw material inventories, and local rare earth ore in Sichuan could also make up for the shortage of US ore. Thus, there was no significant change in local Pr-Nd output. In April, Pr-Nd prices showed a bullish trend. Some separation plants in Guangxi increased their operating rates, leading to a 17% month-on-month increase in local Pr-Nd oxide output.
Dysprosium oxide
The domestic production of dysprosium oxide in April 2024 was 217 mt, with a month-on-month decline of 0.8%. The decline was mainly reflected in Jiangxi region.
According to SMM, some separation plants in Jiangxi underwent equipment maintenance in April and did not resume production that month, resulting in a month-on-month decline of 3% in local dysprosium oxide output. It is reported that due to environmental protection reasons, the separation plants in Longnan area will be shut down in May, and it is expected that the production of rare earth oxides in Jiangxi will continue to decline in May.
Terbium oxide
In April 2024, domestic production of terbium oxide was 40.8 mt, down 4.2% month-on-month. The decline was mainly reflected in Jiangxi, where output fell by about 12%.
According to the SMM survey, some separation plants in Jiangxi underwent equipment maintenance in April, resulting in the suspension of production that month, and the month-on-month output of terbium oxide in the region showed a significant decline. Some companies said that due to environmental protection reasons, separation plants in Longnan are expected to suspend production in the near future, and it is expected that the production of terbium oxide in Jiangxi will continue to decline month-on-month in May.
Gadolinium oxide
In April 2024, domestic gadolinium oxide production was 306.2 mt, a month-on-month decrease of 1%, with the main reduction reflected in Jiangxi.
According to SMM, some separation plants in Jiangxi are about to suspend production. Some companies have already started to suspend production as early as April. The local gadolinium oxide production has shrunk by 13% in April, and is expected to continue to shrink in May.
Holmium oxide
In April 2024, domestic holmium oxide production was 43 mt, a month-on-month decrease of approximately 2%. Production in Guangxi and Jiangsu both decreased to a certain extent month-on-month.
According to SMM research, due to equipment maintenance by some companies, the output of holmium oxide in Guangxi and Jiangsu has decreased month-on-month. The output in Guangxi has decreased by approximately 9% month-on-month, and the output in Jiangxi has decreased by 12%.
Molybdenum concentrate
According to SMM statistics, China's molybdenum concentrate output in April was approximately 17,300 mt, a month-on-month increase of 4.9%.
In April, driven by the steady recovery of downstream demand and good growth expectations, molybdenum concentrates showed huge profits, and most domestic molybdenum mines maintained stable output; some large molybdenum mines in the northern region also returned to normal production.
Entering May, molybdenum mining companies are strongly bullish on prices and have no maintenance plans. Molybdenum concentrate output is expected to hold stable in May.
Ferromolybdenum
According to SMM statistics, China's ferromolybdenum production in April was approximately 16,200 mt, a month-on-month increase of 3.5%.
In March and April, steel mills’ monthly ferromolybdenum purchase volume via tenders exceeded 12,000 mt, and demand was strong. The low spot inventory made ferromolybdenum smelting plants operating at full capacity, so ferromolybdenum output continued to grow slightly.
Entering May, the production schedule of molybdenum-containing steel products from downstream steel plants is still at a high level, so SMM predicts that ferromolybdenum production may increase steadily in May.
Silver
According to SMM research statistics, the production of #1silver in April, 2024 was 1531.764 mt (of which the production of mined silver was 1045.764 mt), a month-on-month decrease of 1.5%, and a year-on-year increase of 14.8%.
Production fell slightly month-on-month, but rose sharply year-on-year. Affected by the high price of silver in April, the output of various enterprises increased and decreased month-on-month. Among them, the enterprises with increased output were mainly mining silver enterprises. Due to the higher price of silver in April and the large number of by-products associated with mining, the market sentiment for mineral purchasing was high, especially the purchasing volume of imported minerals also increased. At the same time, as silver price rose for three consecutive weeks in April, and the silver price reached its highest point in nearly four years, smelting companies were very motivated to ship goods, and some companies increased production. The main reason for the production reduction of some enterprises is that the rising price of silver-containing materials caused production costs to increase, thus purchasing sentiment was slightly suppressed.
Silver nitrate
In April, domestic silver nitrate market demand was strong, with monthly output approaching 1,000 mt. In April, the output of domestic silver nitrate enterprises with production and sales qualifications was 995 mt, an increase of 32.7% month-on-month and 80.6% year-on-year. In April, orders at silver nitrate companies in various domestic regions surged. The main reasons are: 1. Increased downstream rigid demand. 2. Silver prices plummeted in the last week of April, and market purchasing sentiment was high. 3. As the Labour Day holiday approached, buyers stocked up.
As the price of silver began to fluctuate in May, market orders were relatively flat, it is expected that silver nitrate market output will fall in May.
Antimony ingot
According to the SMM survey, the actual production of antimony ingots (including antimony ingots, crude antimony equivalents, cathode antimony, etc.) in China in April 2024 was 6086.115 mt, which was a slight increase of 4.64% compared with 5816.151 mt in March of this year. After the significant rebound in antimony ingot production in March, the slight increase in antimony ingot production in April was in line with market expectations. However, due to tight raw material supplies, some new manufacturers entered a state of production shutdown, and a few manufacturers' production increased or decreased slightly, while some resumed production. Overall, most manufacturers' production remained stable or showed a slight increase. Currently, raw material resources are still relatively concentrated in the hands of some manufacturers, and many manufacturers still face difficulties in resuming or increasing production.
With the environmental inspection team in Hunan in May, it may affect production in the Hunan region. It is expected that the national production of antimony ingots in May 2024 will show a certain decline compared with April 2024, but the magnitude of the increase or decrease will depend on changes in the supply status of antimony raw materials such as imported and domestic ores.
Sodium antimonite
According to SMM's research and statistics on major sodium antimonate manufacturers nationwide, China's production of sodium antimonate in April 2024 was 3,780 mt, a slight decrease of 7.85% from 4,012 mt in March. After a significant rebound in the previous month, production once again fell below the 4,000 mt mark. However, market participants generally expressed that the decline in April production was within expectations. On the one hand, the 7.85% decline was within a normal range, and on the other hand, the sudden and rapid increase in antimony prices in April left many manufacturers scrambling to purchase raw materials, which may also affect future production.
Entering May, end-user manufacturers are expected to maintain relatively robust production. Currently, sodium antimonate manufacturers are still generally optimistic that the production of end-user photovoltaic manufacturers in 2024 will show an upward trend, and demand in the photovoltaic industry is expected to remain strong. SMM predicts that China's production of sodium antimonate in May will most likely remain at around 4,000 mt, with the possibility of a slight increase.
Refined bismuth
According to SMM's survey of bismuth manufacturers across the country, China's refined bismuth output in April 2024 was 1,841.345 mt, a slight decline in output. Compared with the national refined bismuth output of 1923.275 mt in March 2024, it fell 4.26% month-on-month. Since bismuth production in March rebounded sharply after the Spring Festival compared with February, market participants generally said that the slight decline in production in April came as no surprise. However, compared with the production in the same period in 2023, it is still down a lot year-on-year, which is also consistent with the current tight situation of bismuth raw materials in the market. Many market participants said that the current bismuth raw material market is still obviously tight, which could continue to affect production in the future. In addition, the central environmental protection inspection team will carry out checks in Hunan in May, which will have an impact on Hunan's bismuth output to a certain extent. Therefore, SMM predicts that the national refined bismuth production in May 2024 is more likely to continue to fall, and it will be difficult to return to above the 2,000 mt mark again in the short term.
Titanium dioxide
According to SMM data, China's titanium dioxide production in April 2024 was 380,000 mt, with a month-on-month decrease of 2.5% and a year-on-year increase of 12%.
Titanium dioxide production in various regions saw mixed changes in April. Affected by the market and environmental protection measures, a few enterprises and large plants in Shandong reduced production, while titanium dioxide production increased in Sichuan, Guangxi, and Guangdong.
Titanium dioxide prices showed weak performance in April. Order intake for enterprises fell short of expectations, and inventories of some manufacturers increased. Recently, the downstream market for titanium dioxide has been generally sluggish, with most downstream customers making purchases only to meet immediate demand. Affected by high costs of titanium dioxide raw materials, titanium dioxide prices fell slightly in April, down around 500 yuan/mt. Transaction prices were relatively chaotic, often negotiated on a case-by-case basis. SMM predicts that titanium dioxide production in May will remain at 370,000 mt.
APT
According to SMM statistics, China's APT production in April was approximately 9,600 mt, a month-on-month decrease of 3.9%.
Entering April, affected by environmental protection checks, the overall operating rate of APT smelters fell. In addition, some smelters undertook maintenance due to severe loss.
Entering May, APT smelters still struggle with losses at the current market prices. Since most smelters need to ensure delivery of long-term orders, there will not be a sharp drop in output. Therefore, SMM predicts that APT output may hold stable in May.

Lithium carbonate
In April, domestic production of lithium carbonate reached about 52,893 mt, up 24% MoM and up 80% YoY. From January to April, the total domestic production was 169,683 mt, up 35% YoY. The profitability of spodumene-based smelting plants has recovered, thanks to stable long-term pricing agreements with overseas mines during Q1 and Q2. In April, not only did plants that were operating normally continue to increase production, but also those that were under maintenance in February and March resumed production. Additionally, some lithium salt plants received more subcontracting orders, further boosting output at spodumene-based smelters. Although some lepidolite-based smelting plants delayed starting operations earlier due to cost issues and only resumed on a small scale in April, the largest increase in production came from a significant ramp-up by a leading integrated enterprise. Although most companies in salt lake regions increased production due to warmer weather and other factors, the overall rise in lithium extraction from salt lakes in April was modest. This limitation was primarily because leading enterprises underwent maintenance for about half of the month.
Entering May, despite ongoing rotational maintenance at some lithium salt enterprises and slowed production resumption at small and medium-sized enterprises in Jiangxi due to a central environmental inspection, China's lithium carbonate production is projected to reach 60,688 mt, up 15% MoM, anticipated with the completion of maintenance and a continued ramp-up in operations. According to research by SMM and interviews with local lithium salt factories in Jiangxi, the current environmental inspections have not significantly impacted the production of large local enterprises. The situation will continue to be monitored for further developments. The production efficiency of salt lake enterprises is improving with rising temperatures and the resumption of operations after maintenance by leading companies, aligning with earlier expectations. Looking ahead, it will be crucial to monitor whether the sales growth of NEVs in May and June meets expectations.

Lithium Hydroxide
In April 2024, China's lithium hydroxide production totaled 35,570 mt, up 30% MoM and up 52% YoY. Breaking down the production methods, the output from the smelting process was 31,500 mt, up 32% MoM and up 67% YoY. Output from the causticization method was 4,000 mt, up 16% MoM but down 10% YoY. From January to April 2024, China's lithium hydroxide production reached 103,000 mt, up 11% YoY. The production in April particularly surged due to strong demand for high-nickel ternary cathodes downstream, especially around the Labour Day holiday. Anticipating transport restrictions during the holiday, some cathode companies made advanced purchases and extended their stockpiling, thus boosting their procurement of lithium hydroxide. On the supply side, inventory levels at smelting enterprises remained low. To meet rising downstream demand, these enterprises increased their scheduled production, leading to higher output. Additionally, some overseas manufacturers experienced a significant rise in subcontracting orders, and several manufacturers completed initial testing of new production lines, further enhancing scheduled production for the month. SMM forecasts that lithium hydroxide production in May will be approximately 35,290 mt, down about 1% MoM but up 41% YoY.

Cobalt Sulphate
In April, China's cobalt sulphate production reached 5,129 mt in metal content, up 7% MoM and down 15% YoY. The increase was driven by certain enterprises ramping up production, despite a general slump in market demand and reduced output at some smelting plants due to maintenance or switch to other business. This rise was supported by demand for Co3O4 delivery orders and a higher proportion of self-supply, which compensated for the reductions elsewhere, resulting in a slight overall increase in production.
For May, production of cobalt sulphate is expected to decline to about 4,595 mt in metal content, down 10% MoM and down 27% YoY. This anticipated drop is due to significant inventories at cobalt salt factories and social levels, compounded by the impact of negative profit margins.

Tricobalt Tetraoxide
In April, China's production of tricobalt tetraoxide reached 7,515 mt, up 5% MoM and up 21% YoY. This production boost was primarily due to two factors: firstly, Co3O4 factories had secured a significant number of orders, ensuring that smelting plants maintained a normal operating rate to meet these commitments; secondly, despite a dip in downstream demand towards the end of April, low inventory levels at Co3O4 enterprises allowed production to continue at normal operating rate. These elements collectively drove the production increase.
In May, downstream demand is weakening, with reduced Co3O4 orders and scheduled maintenance at smelting plants expected to cut production. The forecasted output is around 6,515 mt, down 13% MoM and down 8% YoY.

Ternary Cathode Precursor
In April 2024, China's production of ternary cathode precursor was about 73,693 mt, down 4% MoM but up 38% YoY. From January to April 2024, total production reached 288,958 mt, up 24.63% YoY.
In April, facing high metal salt prices, precursor companies selectively accepted orders, aligning production with sales, which slightly reduced output below expectations. Domestically, cathode firms consistently purchased necessary stock. 6-series cathode was quite popular with top battery manufacturers. Some firms saw declining overseas orders.
For May 2024, scheduled production for cathodes is weakening, with long-term contracts slowing precursor procurement and high nickel salt prices constraining smaller producers, despite some external demand. However, this demand is small and unlikely to significantly impact overall volume. On the supply side, despite potential declines in overseas orders and high raw material costs, supply will remain constrained. Precursor scheduled production will continue to be demand-driven.
For May 2024, China's projected production of ternary cathode precursor is about 68,218 mt, down 7% MoM but up 11% YoY.

Ternary Cathode Material
In April 2024, China produced 65,240 mt of ternary cathode materials, up 4% MoM and up 53% YoY. From January to April, the cumulative growth was 32% YoY.
In April, the scheduled production of ternary cathode materials in China continued to grow, though at a reduced rate. Compositionally, Series 5 materials made up 22%, Series 6 accounted for 30%, and Series 8/9 comprised 46%, with Series 6 increasingly displacing Series 5. Leading firms specializing in medium to high nickel content materials saw significant growth, while second-tier manufacturers experienced a modest recovery, further concentrating the market.
On the demand side, in the EV market, some automakers initiated price wars in early April to sustain orders. Despite a slight MoM decline in vehicle sales in April, performance was still stronger than in previous years, according to the China Passenger Car Association. A divergence has emerged between battery cell production schedules and vehicle sales volumes. Ternary battery cell manufacturers, facing low inventories and stable raw material prices, have increased operating rates, boosting demand for ternary cathode materials. However, some manufacturers have seen demand for materials weaken due to high previous stock levels and a less optimistic forecast for downstream vehicle sales. In digital and e-bike battery markets, demand for ternary cathode has remained stable despite slight fluctuations in lithium prices. Ternary cathode demand showed an overall upward trend.
In May 2024, China's production of ternary cathode materials is projected to decrease by about 10% MoM to 58,441 mt, but up 7% YoY. Cumulative production from January to May may reach 188,817 mt, up 24% YoY. Despite April's anticipated price cuts by automakers, the seasonal slump in vehicle sales persisted. Battery manufacturers adjusted their May orders and scheduled production based on their inventory levels, leading to a decline in scheduled production for ternary cathode material firms. This, along with reduced downstream orders and impending destocking strategy, could also contribute to the production downturn.
In May 2024, the composition of ternary cathode materials in China is estimated to be 25% Series 5, 31% Series 6, and 41% Series 8/9, with Series 8 seeing a notable decrease MoM. The production cut was mainly among companies that had higher operating rates in early Q1, while second and third-tier manufacturers saw less significant declines. Additionally, production in the consumer and e-bike battery markets remained mostly stable, diverging from trends in the EV market.
In May, demand for ternary cathode materials in the EV market declined, primarily due to two factors. Firstly, stable raw material prices and strong sales in Q1 led battery cell manufacturers to build up inventories. However, with automakers lowering sales forecasts for Q2, these manufacturers began depleting their stock, reducing demand for new materials. Secondly, significant stockpiling for new vehicle models in Q1 meant much of this demand was already met in Q2, further diminishing the immediate need for additional materials.

Iron Phosphate
In April, China produced 137,600 mt of iron phosphate, up 14% MoM and up 89% YoY. The operating rate of iron phosphate enterprises improved due to a rebound in market demand and a noticeable rise in supply. In April, the supply of phosphoric acid tightened significantly due to lower inventories post-spring planting and a maintenance shutdown at a chemical plant, causing phosphoric acid prices to spike and subsequently increasing the costs of iron phosphate. In April, demand surged from downstream LFP cathode and battery cell manufacturers, boosted by price wars in the NEV sector. Despite this, stringent cost controls among these manufacturers kept iron phosphate prices only slightly elevated, closely mirroring rising costs. To tackle losses, some iron phosphate producers rejected low-priced orders and left some production capacity idle.
Looking ahead to May, the iron phosphate market is expected to be propelled by mid-year grid connection demands in the energy storage sector and stable demand in the EV sector. Supply is anticipated to grow, with projected production in China reaching 146,000 mt, up 6% MoM and up 49% YoY.

LFP
In April, China's production of LFP surged to 167,530 mt, up 22% MoM and up 109% YoY, with a cumulative annual increase of 69%. Regarding raw materials, lithium carbonate prices fluctuated, while iron phosphate prices experienced a slight increase. In April, the LFP pricing formula used by battery cell manufacturers, which includes discounts on lithium carbonate and processing fees, remained stable with no significant adjustments. As a result, passing on the rise in LFP costs to downstream sectors continued to be challenging. In April, operating rates among leading LFP enterprises improved notably, and second and third-tier LFP cathode companies also saw a growth in orders and actively pursued new customers. This contributed to a significant increase in LFP supply during the month. Demand for LFP cathodes in April was significantly boosted by ongoing price wars in the NEV sector, the introduction of new models, and incentives from trade-in policies. These factors, together with increased scheduled production by downstream battery cell manufacturers, stimulated demand in the EV market.
Looking ahead to May, driven by mid-year grid connection demands in the energy storage market and stable demand in the EV sector, LFP production in China is projected to reach 182,960 mt, up 9% MoM and up 64% YoY.

LCO
In April, China's production of LCO hit 7,090 mt, up 12% MoM and 16% YoY. From a cost perspective, declining prices of raw materials contributed to a decrease in LCO prices. Leading LCO manufacturers continued to increase production, whereas second-tier manufacturers mostly maintained steady levels. Additionally, some manufacturers ramped up scheduled production due to the release of new capacity. Demand side, the high-end digital LCO market exhibited signs of recovery, with leading battery cell manufacturers noting a slight increase in order pick-up. However, demand for LCO in e-cigarettes significantly declined due to stricter regulations in overseas markets.
In May, China's production of LCO is expected to reach 7,260 mt, up 2% MoM and up 5% YoY. On the supply side, market segmentation is evident. In the mobile phone sector, leading manufacturers are seeing a stable, modest increase in demand due to the recent launch of new products. However, the e-cigarette market continues to face challenges, leading to reduced production schedules among medium and small manufacturers. Some are pivoting to other niche markets like drones to find new orders. This shift is intensifying price competition within the e-cigarette market.
LMO
In April 2024, China's production of LMO surged to 11,856 mt, up 63.8% MoM and up 74.3% YoY. This significant growth can be attributed to two main factors.
Firstly, the industry has entered its traditional peak season, boosting downstream demand. The low-end digital market continues to grow steadily, and sales of two-wheelers have increased since March. This has prompted most LMO enterprises to maximize their production capacities, leading to a higher output MoM.
Secondly, the market outlook for LMO remains relatively clear, with downstream demand primarily driven by essential goods. Despite fierce market and cost competition, most LMO enterprises are maintaining competitive operations and normal production levels.
Looking ahead to May, as stockpiling activities wind down and with the instability of lithium carbonate spot prices, demand growth from downstream battery cell manufacturers is expected to slow. Most LMO enterprises will likely continue operating on a production-to-sales model, with new orders decreasing compared to April. As a result, production growth is not expected to continue at the previous rate. LMO production is projected to reach about 14,227 mt, up 20.0% MoM and up 5.3% YoY.