Exclusive: SMM China July Metals Production and August Forecast

Copper Cathode

In July, China's copper cathode output was 1.0282 million mt, up 2.31% MoM (+23,200 mt) and 11.05% YoY, exceeding the expected 1.0166 million mt by 11,600 mt. The output from January to July totalled 6.9465 million mt, up 461,400 mt YoY (+7.11% YoY).

The main reasons for the higher-than-expected output in July were: 1) the faster-than-expected resumption of production at smelters that had previously reduced output; 2) a smelter in Southwest China accelerated its production, contributing to the higher-than-expected output. However, due to the significant narrowing of the price spread between copper cathode and copper scrap, many smelters faced difficulties in procuring blister copper and copper anode starting in July. This was reflected in the continuous decline in RCs for blister copper and copper anode (as of July 31, SMM blister copper RCs in South China were quoted at 1,100 yuan/mt, down 850 yuan/mt MoM; domestic copper anode RCs were 550 yuan/mt, down 450 yuan/mt MoM). Under dual unfavourable factors, the operating rate of some smelters began to decline, but the reduction was limited.

The sample operating rate of the copper cathode industry in July was 88.41%, up 2.1 percentage points MoM. Specifically, the operating rate of large smelters was 91.22%, up 1.31 percentage points MoM; that of medium smelters was 85.48%, up 3.52 percentage points MoM; and that of small smelters was 73.90%, down 1.13 percentage points MoM. The operating rate of smelters using copper concentrate was 91.7%, up 3.1 percentage points MoM; the operating rate of smelters not using copper concentrate (using copper scrap or copper anode instead) was 71.8%, down 3 percentage points MoM.

Entering August, the number of smelters with maintenance plans further decreased. According to SMM, four smelters planned maintenance, involving a blister copper capacity of 730,000 mt. Although this is a reduction from the 1 million mt capacity involved in July, the output resuming after maintenance in August also decreased compared to July; the net impact of maintenance and resumption will be a reduction of 13,000 mt. Additionally, due to the further deterioration in the supply of copper scrap and copper anode in August, more smelters were forced to reduce production (according to SMM, 11 companies reduced production, with seven primarily using copper scrap and copper anode), and the reduction was greater than in July. Furthermore, due to tight raw material supply, three smelters originally scheduled to start production in August either produced very little or delayed their start-up. These factors contributed to the decline in output in August. However, a smelter in Southwest China will continue to accelerate its production in August, bringing a significant increase in output.

Based on the scheduled production of various smelters, SMM expects domestic copper cathode output in August to be 1.0034 million mt, down 24,800 mt MoM (-2.41% MoM) but up 17,300 mt YoY (+1.46% YoY). The output from January to August is expected to be 7.9499 million mt, up 6.37% YoY (+475,800 mt). The sample operating rate of the copper cathode industry in August is expected to be 86.34%, down 2.07 percentage points MoM. Specifically, the operating rate of large smelters is expected to be 90.04%, down 1.18 percentage points MoM; that of medium smelters is expected to be 83.02%, down 2.46 percentage points MoM; and that of small smelters is expected to be 65.32%, down 8.58 percentage points MoM. The operating rate of smelters using copper concentrate is expected to be 90.2%, down 1.5 percentage points MoM; the operating rate of smelters not using copper concentrate (using copper scrap or copper anode instead) is expected to be 66.9%, down 4.9 percentage points MoM, marking a significant decline for the second consecutive month and reaching a four-month low, with further decline expected in the future. In September, the number of companies reducing production due to tight raw material supply is expected to continue increasing. However, supported by the production resumption after maintenance and the accelerated production of a certain smelter, SMM expects the output in September to continue declining, but the decline will not be significant.

Aluminum

According to SMM statistics, domestic aluminium production in July 2024 (31 days) was 3.683 million mt, up 3.22% YoY. In July, all aluminium smelters in Yunnan Province resumed full production, together with the contribution from new capacity in Inner Mongolia and the resumption of scattered capacity in Sichuan Province, domestic aluminium production maintained a MoM and YoY growth trend. However, amid the off-season, the reduction or maintenance of billet factories and other aluminum processing plants impacted the proportion of aluminum liquid, which fell again. The proportion of aluminum liquid decreased by 1.1 percentage points MoM and 1.9 percentage points YoY to around 70.76%. Based on SMM's aluminum liquid proportion data, the domestic aluminium ingot production in July increased by 6.41% YoY to around 1.0769 million mt.

Capacity Changes: As of the end of July, SMM statistics show that the domestic existing capacity of aluminium was about 45.36 million mt, and the domestic operating capacity of aluminium was about 43.42 million mt, with the industry operating rate up 2.41 percentage points YoY to 95.72%. In July, all aluminium smelters in Yunnan Province resumed full production, together with the new capacity in Inner Mongolia and the resumption of scattered capacity in Sichuan Province, contributing to the domestic operating capacity of aluminium.

Production Forecast: In August 2024, domestic operating capacity of aluminium is expected to continue to rise, mainly due to the full production of the third phase of the Huayun project in Inner Mongolia, and the gradual resumption of previously upgraded projects in Sichuan. SMM expects the annualized domestic operating capacity of aluminium to increase by about 100,000 mt MoM to 43.52 million mt by the end of August, with production in August (31 days) reaching around 3.691 million mt. With the traditional peak season approaching, together with the recent rapid correction in aluminium prices, downstream demand has slightly improved, which may drive the operating rate of intermediate products such as aluminum billet to rebound. It is expected that the proportion of aluminum liquid in August will rebound to around 73%. Further attention is needed on the resumption of aluminium production in various regions and the operating rates of downstream products such as aluminum billet.

Alumina

According to SMM data, China's metallurgical-grade alumina output in July 2024 (31 days) was 7.173 million mt, with an average daily output of 231,400 mt, an increase of 3,300 mt compared to June. The total monthly output rose 4.84% MoM and 4.43% YoY. By the end of July, China's existing capacity for metallurgical-grade alumina was 100.6 million mt, with an operating capacity of 84.46 million mt and an operating rate of 83.5%. From January to July 2024, the total domestic output of metallurgical-grade alumina reached 47.466 million mt, up 3.92% YoY.

By region: Shanxi: The operating rate in July was 79.5%, up 2.9% from June, mainly due to a local alumina refinery increasing its operating capacity since late June by supplementing with imported ore and a small amount of domestic ore, involving an annual capacity of 700,000 mt. Henan: The operating rate in July was 69.9%, up 1.6% from June, mainly due to a local alumina refinery increasing production in late July by supplementing with imported ore, involving an annual capacity of around 700,000 mt. Guizhou: The operating rate in July decreased by 1.5% from June to 80.3%, mainly as a local alumina refinery reduced production in July due to equipment and raw material supply issues, involving an annual capacity of around 140,000 mt. The company also indicated plans to shut down furnaces for maintenance in early August due to equipment issues, with an expected maintenance period of about a week. Hebei: The operating rate in July increased by 8.5% from June to 98.1%, mainly due to a local alumina refinery completing equipment maintenance in July and resuming full production, involving an annual capacity of around 300,000 mt. Guangxi: The operating rate in July rose slightly by 1.1% from June to 90.0%, mainly due to a local alumina refinery reducing production by about a quarter in June due to roasting furnace maintenance, which was completed in mid-July, resuming full production, involving an annual capacity of 300,000 mt. Shandong: The operating rate in July decreased by 2% from June to 92.4%, mainly due to a local alumina refinery reducing production since early June for production line maintenance, involving an annual capacity of around 300,000 mt.

Forecast for August: According to the SMM survey, approximately 500,000 mt of resuming capacity in Henan and 100,000 mt in Inner Mongolia, totaling 600,000 mt, will gradually release output in August. Additionally, a producer in Inner Mongolia plans to commission a second 500,000 mt production line in mid-August, bringing the alumina refinery to full capacity. Therefore, the average daily output of alumina in China is expected to continue increasing in August. However, due to the lack of large-scale resumption of bauxite production in Shanxi and Henan, the supply of domestic bauxite remains tight, which may limit the significant increase in alumina output in these two regions. SMM expects that in August 2024, the average daily output of metallurgical-grade alumina in China will reach 233,000 mt, with a total operating capacity of approximately 85.06 million mt, up 2.8% YoY.

Overseas aluminum

According to SMM statistics, the total production of overseas aluminium in July 2024 (31 days) was 2.536 million mt, up 0.5% YoY. As of July 2024, the cumulative production of overseas aluminium reached 17.388 million mt, up 1.3% YoY. The average capacity utilisation rate overseas was 87.9%, slightly up 0.2% MoM and up 0.6% YoY.

By region:

North America: Total output in July was 332,000 mt. The shutdown of New Madrid earlier this year led to a 2.8% YoY decrease in North American aluminium production. The current average capacity utilization rate in North America is 83.9%.

South America: Total output in July was 138,000 mt, up 5.0% YoY. The increase was driven by the resumption of production at two smelters: the Alumar smelter (60% owned by Alcoa, 40% by South 32) and the Aluminio smelter of Brazilian aluminium producer Companhia Brasileira de Aluminio (CBA). The Alumar smelter announced its resumption in April 2022, with a capacity utilization rate recovering to about 67% in July, producing approximately 25,000 mt in July. Additionally, CBA stated that demand in the Brazilian market had improved YoY and plans to restart two production lines in 2023-2024, expecting to add a total capacity of 80,000 mt. In July, CBA's aluminium production was about 30,000 mt, with a capacity utilization rate of approximately 80%, up 2.5% YoY.

Russia: Total production in July was approximately 353,000 mt, up 2.5% YoY. The increase came from the restart of the Taishet smelter. The plant announced its restart in early 2022, but progress has been slow. SMM estimates that the plant's total production in July was about 21,000 mt, with capacity utilisation rates recovering to around 57.6%.

Europe (excluding Russia): Total production in July was approximately 289,000 mt, up 1.2% YoY, with capacity utilisation rates at 72.9%. The increase mainly came from the resumption at Trimet's three plants in Germany. According to SMM estimates, the capacity utilisation rates of the three plants recovered to around 55% in July. Additionally, according to Alcoa's Q2 report, the San Ciprian plant in Spain is still facing difficulties in resuming production, with current operational efficiency at only 6%. Alcoa is actively advancing the sale process of San Ciprian and has already negotiated with three interested companies.

Africa: Total output in July was approximately 140,000 mt, up 2.7% YoY, with an average capacity utilization rate of about 84.9%.

Oceania: Total output in July was approximately 160,000 mt, up 0.1% YoY, with an average capacity utilization rate of about 89.5%.

Middle East: Total output in July was approximately 600,000 mt, down 1.4% YoY, with an average capacity utilization rate of 102.2%.

India: Total output in July was approximately 348,000 mt, up 0.7% YoY, with an average capacity utilization rate of 100.2%.

Excluding China, India, and the Middle East, other regions in Asia: Total production in July was 177,300 mt, up 3.5% YoY. The growth mainly came from Indonesia. The Huaqing Aluminium Smelter in Indonesia started operations in 2023 and has produced 500,000 mt in 2024. SMM estimates that the smelter's production in July was about 24,000 mt, with a capacity utilisation rate of approximately 58%.

Forecast for August: According to SMM statistics, overseas aluminium production in August 2024 (31 days) is expected to be around 2.54 million mt, up 0.5% YoY. The average capacity utilisation rate of overseas aluminium smelters is expected to be around 88%, up 0.2% MoM and 0.7% YoY.

Overseas alumina

In July 2024 (31 days), the production of overseas metallurgical-grade alumina was approximately 4.844 million mt, down 1.4% YoY. The average capacity utilisation rates of global alumina refineries were 80.0%, slightly up 0.6% MoM, but down 3.2% YoY. The cumulative production from January to July 2024 was about 33.427 million mt, up 1.0% YoY.

By region:

Australia: The output in July was 1.423 million mt, down 11.5% YoY. Alcoa's Kwinana alumina refinery was completely shut down by the end of Q2. Additionally, according to Rio Tinto's Q2 report, the Gladstone alumina refineries, Yarwun and QAL, experienced varying degrees of production cuts due to the natural gas pipeline explosion. In July, the capacity utilization rate of the Yarwun refinery dropped to about 73%, down 14% MoM; the capacity utilization rate of the QAL refinery dropped to about 77%, down 11% MoM. Rio Tinto stated that this adverse impact is expected to last until the end of the year, and the annual guidance output has been lowered by about 600,000 mt.

North America: The output for July was 162,000 mt, up 3.7% YoY. The average capacity utilization rate was 70.4%.

South America: The output for July was 974,000 mt, up 4.3% YoY. The average capacity utilization rate was 88.5%.

Africa: The output for July was 34,000 mt, down 0.3% YoY. The average capacity utilization rate was 61.5%.

India: The monthly output was 715,000 mt, up 10.1% YoY. The increase mainly came from Vedanta's alumina refinery in Lanjigarh. In early April 2024, Vedanta announced that the refinery's capacity had increased from 2 million mt to 3.5 million mt, with plans to expand to 5 million mt in the future. According to Vedanta's Q1 FY25 report, alumina production in the quarter (April-June 2024) rose 36% YoY and 11% QoQ to 539,000 mt, reaching a historical high. SMM estimates that the refinery's July output increased by 65,000 mt YoY and expects further growth in the future.

Indonesia: Since Indonesia banned bauxite exports in June 2023, the country's alumina production capacity has rapidly increased. In June, Indonesia's metallurgical-grade alumina output was approximately 329,000 mt, up 17.3% YoY. This was mainly due to the capacity expansion of Nanshan Aluminum's alumina refinery on Bintan Island. An SMM survey shows that the refinery, which started production with 1 million mt in 2022, added another 1 million mt in 2023, bringing the total production capacity to 2 million mt. The current output is close to the nameplate capacity, with July output up 33% YoY. Additionally, PT BAI, a subsidiary of ANTAM and INALUM, commenced production at its alumina refinery in Mempawah, West Kalimantan, in July. The planned capacity of this refinery is 1 million mt.

Russia: Monthly production was 256,000 mt, down 0.3% YoY. The average capacity utilisation rate was about 88.7%.

Europe (excluding Russia): Monthly production was 296,000 mt, up slightly by 0.5% YoY. The average capacity utilisation rate was about 53.7%.

Other Asian regions excluding India, Indonesia, and China: Monthly production was 656,000 mt, down 5.9% YoY. The average capacity utilisation rate was 87.4%.

Forecast for August: According to SMM statistics, the total overseas metallurgical-grade alumina production in August 2024 is expected to be 4.862 million mt, down 1.2% YoY. The average capacity utilisation rate is expected to be about 80.3%, up slightly by 0.3% MoM, down 3.1% YoY.

Primary Lead

In July 2024, China's primary lead production was 304,500 mt, up 7.73% MoM but down 4.75% YoY. From January to July, the total production decreased by 4.67% YoY. The total capacity of the surveyed enterprises in 2024 was 6.0063 million mt.

According to the survey, the production of primary lead smelters in July mostly recovered, primarily in medium and large enterprises, with the monthly output increasing by over 20,000 mt as expected. Although some smelters in Henan, Inner Mongolia, and Guangdong experienced reduced output due to routine maintenance or equipment failures, more smelters resumed production after maintenance in July, mainly in Henan, Hunan, Liaoning, and Yunnan, thus the overall upward trend in primary lead production was not affected.

In August, the production of primary lead smelters continued to recover, with an expected MoM increase in output. Smelters that resumed production in mid-to-late July, such as those in Anhui and Inner Mongolia, will see further output increases in August. Smelters that underwent maintenance in July, such as those in Henan and Guangdong, will resume production in August. Additionally, the import window for lead concentrate was open in July, with favorable import profits, leading to increased raw material inventories for some lead smelters, which also supports the increase in primary lead production in August. According to SMM forecasts, primary lead production in August will increase by over 10,000 mt compared to July, reaching 316,000 mt.

Secondary Lead

In July 2024, secondary lead production was 308,300 mt, down 7.03% MoM and 17.94% YoY. From January to July 2024, the total production was 2.2434 million mt, down 9.88% YoY. In July 2024, secondary refined lead production was 254,700 mt, down 7.69% MoM and 24.02% YoY. From January to July 2024, cumulative secondary refined lead production was 1.8997 million mt, down 12.38% YoY.

In July, the retirement volume of battery scrap did not show significant improvement. By the end of July, the tax-included price of battery scrap jumped significantly, reaching a high of around 12,200 yuan/mt. Battery scrap traders were bullish and reluctant to sell. Secondary lead smelters showed an increased willingness to suspend production due to high raw material costs and poor arrivals. Additionally, with the implementation of the Fair Competition Review Regulations starting August 1, secondary lead smelters anticipated the cancellation of preferential tax rebate policies by local governments, leading to a strong sentiment of production suspension and wait-and-see. July production declined significantly. Entering August, some smelters suspended production due to policy uncertainties and a low market sentiment amid declining lead prices. However, smelters that previously halted production due to equipment failures, maintenance, or license renewals gradually resumed production. Overall, SMM expects secondary refined lead production in August to increase by 14,700 mt to 269,500 mt.

Refined Zinc

In July 2024, China's refined zinc production was 489,600 mt, down 56,270 mt or 10.3% MoM, down 11.15% YoY. The total production from January to July was 3.671 million mt, down 2.81% YoY, below the expected value. Among them, the domestic zinc alloy production in July was 92,200 mt, down 850 mt MoM.

In July, the production of domestic smelters declined more than expected. Heavy rainfall in Sichuan affected the production of local enterprises. Additionally, enterprises in Yunnan, Guangdong, and Guangxi experienced unexpected production cuts and controls, leading to a certain reduction. Furthermore, maintenance in July was mainly concentrated in Henan, Inner Mongolia, Shaanxi, Gansu, and Qinghai. Some smelters in Hunan and Yunnan resumed operations after maintenance. The overall production declined notably.

SMM expects domestic refined zinc production to slightly increase by 700 mt MoM to 490,300 mt in August, down 6.88% YoY. The total production from January to August is expected to be 4.162 million mt, down 3.31% YoY. Entering August, the overall production change will be minimal. The reduction will mainly be concentrated in Inner Mongolia, Shaanxi, Hunan, Yunnan, Sichuan, and Liaoning due to raw material shortages and declining profits. The increase will mainly come from the resumption of operations after maintenance in some smelters in Henan, Hunan, Guangdong, Gansu, Qinghai, and Guangxi.

Refined Tin

According to the SMM survey, China's refined tin production in July reached 15,925 mt, down 2.21% MoM but up 39.75% YoY. In Yunnan, a refined tin smelter still shut down due to handover issues. Although some producers affected by environmental protection inspections in June have resumed normal production and their output has rebounded, the tight supply of mineral resources has impacted the smelting process. Specifically, some smelters had to adjust their production plans and reduce scheduled production due to raw material shortages. Similarly, in Jiangxi, some smelters faced challenges in raw material supply, making it difficult for them to maintain current production levels, resulting in a slight decline in output. In Inner Mongolia, producers maintained a normal production pace, while in Guangxi, a producer saw a significant drop in tin output due to a shutdown for maintenance, but with production expected to resume in early August. Smelters in Anhui and other regions maintained stable production in July. Looking ahead, SMM expects most smelters in Yunnan to maintain their current production levels or slightly reduce output in August. Before the Wa State tin mines in Myanmar are reopened, local smelters will find it difficult to effectively replenish their raw material inventories, making it unlikely for Yunnan smelters to see significant output growth. Similarly, most producers in Jiangxi are unlikely to see production growth in August. In summary, SMM expects China's tin production in August to reach 16,245 mt, up 2.01% MoM and 52.95% YoY.

Refined Nickel

In July 2024, China's refined nickel production reached 28,900 mt, up 8.2% MoM and 33.87% YoY, largely in line with expectations. Previously, nickel producers that had reduced or halted production due to raw material shortages gradually resumed normal production, and their capacity was smoothly released, now nearing full production. Additionally, some newly commissioned electro-deposited nickel capacity in Q2 began to come into effect. Furthermore, due to the earlier expansion of the price spread between domestic and overseas markets, the increased production from nickel producers in East China was stable in July, leading to a significant increase in refined nickel production compared to June.

In August 2024, China's refined nickel production is expected to slightly decrease to 28,400 mt, a slight decline from July. According to the SMM survey, nickel prices in August still fluctuated at low levels, the price spread between domestic and overseas markets narrowed, and the opening of the import window reduced export profits. Therefore, domestic nickel plate exports are expected to further decline. Additionally, due to losses amid low nickel prices, the production ramp-up of newly commissioned nickel plate production lines in Q2 slowed down, with production increases expected to be evident in Q3 and Q4. Due to planned equipment maintenance at a large refined nickel producer in Northwest China, nickel plate production in August is expected to decrease. Overall, refined nickel production in August 2024 is expected to show a downward trend.

NPI

In July 2024, China's NPI production was 29,900 mt in nickel content (+6.43% MoM) and 737,000 mt in physical content (+10.69% MoM). Among these, high-grade NPI production was approximately 219,000 mt in physical content and 22,200 mt in metal content (+8,400 mt in metal content); low-grade NPI production was approximately 518,000 mt in physical content and 7,700 mt in metal content (+9,700 mt in metal content). Despite Indonesian RKAB new approval quotas in July, the mining volume was limited by funding and rainfall, leading to a continued rise in the import of Philippine nickel ore, which in turn raised the price of Philippine nickel ore and increased the costs for domestic smelters. Additionally, the tight supply of Indonesian NPI resources pushed the strong performance of NPI in July, with prices fluctuating upwards, leading to the profit recovery of some smelters and enhanced production drive. From the perspective of integrated stainless steel mills, since purchasing high-grade NPI externally was more cost-effective for 300-series stainless steel mills, their high-grade NPI production slightly decreased in July. With 300-series stainless steel prices fluctuating downwards and raw material prices running strong, some stainless steel mills suffered losses and adjusted their output structure to increase 200-series stainless steel production. Consequently, the total low-grade NPI output of 200-series stainless steel production lines increased in July.

In August 2024, China's NPI production is expected to reach around 30,400 mt in metal content, up 1.58% MoM. According to an SMM survey, a smelter in East China will continue to ramp up production in August, while a smelter in North China will undergo partial line maintenance, with limited impact on production. Additionally, the increase in NPI production from integrated stainless steel mills in August is still expected to be concentrated in the 200-series stainless steel production lines. In summary, China's NPI production in August is expected to maintain a growth trend, but the growth rate will slow down.

Indonesian NPI

In July 2024, Indonesian NPI production was 104,900 mt in nickel content, down 12.1% YoY and 6.5% MoM. The cumulative production for 2024 has reached 795,300 in nickel content, up 3.8% YoY. Supply side, although the RKAB approval quota for Indonesian laterite nickel ore reached 240 million wmt in July, the supply tightness for laterite nickel ore in the Indonesian market did not significantly improve, leading to high prices of Indonesian domestic trade laterite nickel ore. Therefore, the ore cost for Indonesian NPI smelting rose.

Demand side, downstream smelters' willingness to purchase laterite nickel ore continued to strengthen due to inventory constraints. However, the grade of available nickel ore in the market showed a certain decline, forcing Indonesian producers to source nickel ore from the Philippines. This situation, combined with the significant decline in laterite nickel ore shipping efficiency due to weather factors in July, led to the reduction in Indonesian NPI production in July. However, with the commissioning of new production lines in Indonesia in July, the future capacity ramp-up and the recent sustained rebound in NPI prices, the market has gained some production confidence. It is expected that Indonesian NPI production will recover to some extent in August, reaching 110,200 mt in nickel content, up 5.05% MoM but slightly down 5.9% YoY.

Nickel Sulphate

In July 2024, China's nickel sulphate production was 27,800 mt in metal content, or 126,200 mt in physical content, down 9% MoM and 29.7% YoY. Supply side, as the prices of raw materials such as scrap and intermediate products were higher than nickel sulphate, most nickel sulphate plants still suffered losses from early to mid-July. Additionally, since some plants had excessively discounted their products in June to clear inventory, they held prices more firm throughout July and reduced production amid losses. Demand side, although there was an increase in demand in July, precursor makers slowed down their nickel sulphate procurement and further cut production due to proactive inventory adjustments by cathode material companies.

Entering August, demand side, ternary cathode precursor companies are expected to see some demand growth, but most prefer to sign quarterly long-term contracts with nickel sulphate plants. Some companies had already purchased low-priced nickel sulphate in July, making them less willing to accept high-priced nickel sulphate. It is expected that nickel sulphate production will see a slight increase in August, but the growth will be limited. Currently, it is estimated that China's nickel sulphate production in August 2024 will be 28,400 mt in metal content, or 129,300 mt in physical content, up 2.5% MoM but down 31.6% YoY.

High-purity Manganese Sulphate

According to SMM, China's high-purity manganese sulphate production in July 2024 was approximately 13,000 mt, down 18.75% MoM and 40.91% YoY. The survey shows that the production of high-purity manganese sulphate in July saw a significant decline compared to June. On the raw material side, although manganese ore prices slightly decreased, cost support remained strong, and there is still a possibility of a rebound in manganese ore prices. Sulfuric acid prices have already increased by 20% and may rise further, leading high-purity manganese sulphate producers to hold their offers firm again. Demand side, downstream ternary cathode precursor producers maintained rigid demand, with most still executing long-term orders and fewer spot purchases, and they mainly digested inventory. Therefore, the spot market was inactive. With weak demand, high-purity manganese sulphate producers were cautious in production, mainly producing according to orders to avoid low-price sales or excessive inventory, leading to a noticeable overall reduction in production. It is expected that in August, the scheduled production of downstream ternary cathode precursor producers will increase, further releasing demand, thereby driving an increase in the production of high-purity manganese sulphate. The production in August is expected to reach approximately 16,100 mt, up 23.85% MoM but down 6.94% YoY.

Electrolytic Manganese Dioxide (EMD)

According to SMM, China's EMD production in July 2024 was 14,900 mt (including 800 mt of LMO type, 8,900 mt of alkaline manganese type, and 5,200 mt of carbon zinc type), up 1.39% MoM but down 16.86% YoY. The survey showed that EMD production in July slightly increased compared to June, with LMO type production declining, alkaline manganese type production holding relatively stable, and carbon zinc type production slightly increasing. The primary battery market was relatively stable, with most orders being long-term contracts, resulting in minimal demand fluctuations. When downstream needs to replenish inventory, the scheduled production of EMD producers will correspondingly increase. Conversely, the secondary battery market was still in the traditional off-season, with fierce competition and significantly narrowed profit margins. To maintain operations, most LMO producers chose to reduce costs or cut production. Additionally, due to the higher price of EMD compared to Mn3O4, its limited advantage led to an overall decline in market demand. It is expected that in August, the primary battery market may see stockpiling demand, while the secondary battery market is expected to rebound as the off-season ends, thereby driving further growth in the overall EMD market production. Therefore, considering the market situation, EMD production in August is estimated to be around 15,900 mt, up 8.16% MoM but down 6.27% YoY.

Mn3O4

According to SMM, China's Mn3O4 production in July 2024 was 8,900 mt (including 5,300 mt of electronic grade and 3,600 mt of battery grade), down 5.32% MoM and 16.43% YoY. In July, Mn3O4 production slightly decreased compared to June, mainly in battery-grade Mn3O4. The fluctuations in the prices of manganese sulphate solution and EMM led to unstable cost support, increased wait-and-see sentiment in the market, and more cautious shipment strategies by producers. Meanwhile, the LMO industry was in the off-season, with slightly weak demand and spreading market pessimism, further slowing down the procurement of raw materials, resulting in a slight decline in Mn3O4 scheduled production.

It is expected that by August, the LMO market may show signs of recovery, with increased procurement and restocking demand for Mn3O4, driving up producers' scheduled production and improving market trading atmosphere. Based on market feedback, the overall production of battery-grade Mn3O4 in August is expected to increase to about 9,400 mt, up 5.62% MoM and 9.30% YoY.

High-carbon Ferrochrome

According to SMM, China's high-carbon ferrochrome production in July 2024 dropped slightly to 776,000 mt, down 25,000 mt MoM (-3.12% MoM) but up 174,500 mt YoY (+29.01% YoY). Among them, the production in Inner Mongolia was 516,000 mt, down 21,100 mt MoM (-3.93% MoM); production in Guizhou was 37,000 mt, down 14.94% MoM. Although the high-carbon ferrochrome bidding price of stainless steel mills remained high in July, retail prices for high-carbon ferrochrome declined as the procurement outside long-term contracts by steel mills decreased significantly, leading to a sluggish retail market. The price of chrome ore remained high, further squeezing the profit margins of high-carbon ferrochrome manufacturers, reducing production enthusiasm. Additionally, some high-carbon ferrochrome manufacturers conducted equipment maintenance, resulting in a decline in high-carbon ferrochrome production in July.

The high-carbon ferrochrome production in August is expected to be 771,700 mt, further decreasing compared to July. In August, the procurement price of high-carbon ferrochrome by mainstream stainless steel mills broke the four-month stable trend, decreasing by 100 yuan/mt (Cr50%). Although the decrease in procurement price was limited, the high cost of chrome ore led to widespread losses at high-carbon ferrochrome enterprises. However, with the approaching peak season of "Golden September and Silver October," high-carbon ferrochrome manufacturers are hopeful for demand growth. Additionally, some manufacturers still held low-cost chrome ore purchased earlier, making the impact of the price decrease relatively limited. Currently, high-carbon ferrochrome capacity is mainly concentrated in large manufacturers in North China, where the cost of halting production is high, so most enterprises have no plans to reduce production. Overall, the production of high-carbon ferrochrome is not expected to see significant adjustments.

Stainless Steel

According to the SMM survey, China's stainless steel production in July 2024 was approximately 3.1838 million mt, down 1.44% MoM and 2.13% YoY. Among this, 200-series stainless steel production was 921,000 mt, up 0.52% MoM; 300-series stainless steel production was 1.5918 million mt, down 3.23% MoM; and 400-series stainless steel production was 671,000 mt, down 0.28% MoM.

In July, due to the impact of high temperatures, downstream operating rates significantly declined, leading to weakened demand for stainless steel and prompting steel mills to reduce production. Some stainless steel mills in East China and South China initiated maintenance plans, affecting approximately 21,000 mt of 200-series stainless steel production and 48,000 mt of 300-series stainless steel. It is noteworthy that state-owned and private stainless steel mills adopted different production strategies during the industry off-season. Amid the traditional weak demand, FeNi supply was tight while high-grade NPI prices ran strong, putting pressure on 300-series stainless steel prices and causing continuous profit shrinkage. Some private stainless steel mills shifted 300-series capacity to 200 and 400-series to reduce losses; state-owned stainless steel mills saw a decline in 200 and 400-series stainless steel production but maintained stable 300-series stainless steel production. This resulted in an overall reduction in 300-series stainless steel production while 200 and 400-series stainless steel production held flat, or even 200-series stainless steel production slightly increased.

Entering August, due to demand expectations in the traditional peak season of "Golden September and Silver October", stainless steel mills still chose to increase production in preparation for September. From the perspective of scheduled production, 300-series stainless steel production is expected to increase by about 80,000 mt in August, up 5.16% MoM, while 200 and 400-series stainless steel production is expected to decrease by 2.3% MoM and 4.92% MoM respectively due to inventory backlog and continuous price decline. From the perspective of agent orders, August orders are currently not ideal, with no stockpiling plans from downstream in advance. Since the beginning of August, high-grade NPI transaction prices have risen above 1,000 yuan/mtu. With stainless steel prices difficult to rise and expected losses, the increase in production still faces certain challenges.

EMM

According to SMM, China's EMM output in July 2024 was 100,100 mt, up 0.56% MoM and 70.77% YoY. From January to July 2024, the total output was approximately 584,000 mt, up 14.35% YoY. Although some EMM plants slightly reduced production due to weak downstream demand, most large EMM plants maintained 70% of their capacity. Additionally, some EMM plants in Hunan that had previously halted production resumed operations. Overall, the increase in EMM output outweighed the decrease, resulting in a slight increase in total EMM output in July.

Entering August, due to the off-season for downstream steel mills, their enthusiasm for purchasing EMM was weak, and some EMM plants have already shut down for maintenance. Furthermore, some EMM plants' own mines are undergoing rectification, leading to a tight supply of manganese carbonate ore. EMM plants are willing to reduce production, and overall EMM supply decreases. Based on the scheduled production survey of EMM plants, the output in August is expected to reach approximately 99,400 mt.

SiMn Alloy

According to SMM, in July 2024, China's production of SiMn alloy was 884,300 mt, up 0.53% MoM but down 6.82% YoY. From January to July 2024, the production was approximately 5.8298 million mt, down 10.87% YoY. Although production in South China like Guangxi and Guizhou slightly decreased due to losses, producers in North China like Inner Mongolia and Ningxia still needed to fulfill previous orders, maintaining a high operating rate. Additionally, producers in Yunnan and Sichuan saw a slight increase in production due to the electricity price advantage during the rainy season. Overall, the increase in SiMn alloy production outweighed the decrease, leading to a rise in total production in July.

In August, some companies experiencing losses have already started furnace maintenance. Moreover, downstream demand for SiMn alloy was weak, providing insufficient support in the future. Both SiMn alloy plants in North and South China showed a strong intention to reduce or halt production. Therefore, the overall SiMn alloy production in August is expected to decrease to approximately 797,800 mt.

Silicon Metal

According to SMM, China's silicon metal output in July was 487,300 mt, up 7.5% MoM (+34,100 mt) and up 72.3% YoY (+204,400 mt). From January to July 2024, the total output was 2.7644 million mt, up 39.7% YoY (+786,300 mt).

In July, China's silicon metal output continued to increase, mainly due to the resumed capacity in Sichuan and Yunnan in late June or early July. It continued to release output in July, contributing an increase of nearly 35,000 mt. The three major northern producers maintained high operating rates, with a high regional capacity share. Although some capacity reductions occurred in places like Ili, the overall output in Xinjiang remained high. In July, silicon metal spot prices continued to decline, and some producers in regions like Fujian, Henan, and Guangxi reduced or halted production, leading to a decrease in output. However, on a national scale, the increase in regional output was more significant, resulting in a continued MoM increase in July output.

Looking into August, some small silicon metal producers in Xinjiang, Henan, Sichuan, and Chongqing reduced production in late July and early August. In addition, with the Si2409 silicon metal futures contract falling below 10,000 yuan/mt on August 8, market sentiment was hit, potentially accelerating the reduction of loss-making capacity. The expected increase in new capacity is limited, and it is anticipated that silicon metal output in August will fall below 470,000 mt.

Polysilicon

In July, China's polysilicon production reached 150,000 mt, showing a slight decrease of less than 1% MoM. The overall scheduled production of polysilicon stayed stable with minor fluctuations, but there were variations among producers. One second-tier producer resumed production, and a leading producer increased output from its production line, contributing to new increments. Additionally, two other leading producers experienced production cuts. Compared to the downstream demand from PV wafers, polysilicon remained in surplus. In August, China's polysilicon production is expected to be 139,000 mt. The reduction will mainly come from the complete shutdown of some bases by a leading domestic producer. However, the increased output from two bases in Inner Mongolia by another producer will partially offset the reduction.

PV module

According to SMM statistics, China's PV module production in July was approximately 46.8GW, down 0.9 GW from the previous month, a MoM decrease of 1.9%. Compared to the same period last year, the increase was about 4.1%. From January to July 2024, China's cumulative PV module production was approximately 325.7GW, up by 61.7GW YoY, an increase of about 23.4%.

The demand for modules in July has not significantly improved. Although several centralized procurement delivery orders in the domestic market have driven demand, the shipping momentum in overseas markets has slowed down. Europe has also entered the summer break period, causing project procurement progress to stagnate. In July, the actual output of some module companies was lower than expected, leading them to reduce production to avoid inventory accumulation. Integrated module manufacturers, in particular, have been cautious in adjusting their operating rates due to ongoing losses. Later, module manufacturers attempted to secure orders through low-price strategies, but the actual order volume remained insufficient. Some companies chose to accept only outsourcing orders, and the number of manufacturers halting production increased.

The PV module production for August are expected to reach 48.5GW, an increase of 1.7GW MoM, representing a growth of approximately 3.6%. Compared to the same period last year, this is a decrease of about 8.6%. Due to the overall poor demand, the production of various companies diverged. With the peak delivery season in H2 approaching, some companies have significantly increased their operating rates due to the rise in the number of orders to be delivered. Most companies, considering the volume of orders on hand and inventory pressure, have chosen to maintain stable operating rates or make slight reductions. Among them, the production proportion of N-type modules in August further increased to 89%. Since July, over 90% of the module selections by downstream end-users have been N-type modules, and some centralised procurement projects have stopped purchasing P-type modules. Therefore, module companies are actively adjusting the production ratio of P-type and N-type modules, with some even choosing to shut down P-type module production lines. The production proportion of N-type modules for leading companies has approached 90%.

Solar cell

In July, the total production of solar cells by Chinese companies at domestic and overseas bases was 58.68 GW. The production at domestic bases was 55.93 GW, with P-type cells expected to produce around 10.78 GW and N-type cells around 45.15 GW, accounting for 80.73% of the total. The production of N-type cells increased by approximately 5 GW in July, mainly due to Topcon cells. Among manufacturers, integrated manufacturers showed a significant increase in cell production, while non-integrated cell makers maintained stable production. In terms of supply and demand in July, the monthly transaction volume of cells saw a significant decline compared to June, with cell makers facing high shipping pressure, a noticeable increase in inventory, and falling prices. Looking ahead to August, cell orders are expected to continue declining, while the production of leading cell makers on the supply side remains on an upward trend, further increasing inventory pressure in the cell market.

In August, the total planned production of solar cells by Chinese companies at domestic and overseas bases is expected to be 58.54 GW, with domestic planned production at 55.74 GW. The planned production of P-type cells is 8.96 GW, and N-type cells is 46.78 GW. The market supply of N-type cells is expanding, while demand is shrinking, and prices may continue to bottom out.

PV glass

According to SMM data, the monthly production of PV glass in China reached 2.6322 million mt in July, an increase of 5.86% compared to June. Although there were many cold repairs on domestic production lines in July, the repair times were mostly at the end of the month, having little impact on the monthly output. Additionally, July had one more production day than June, resulting in a relatively significant increase. It is expected that the production of PV glass in China will decrease in August, mainly due to the reduction in output from cold repairs starting to reflect on the supply side. Moreover, some production lines are still scheduled for cold repairs in August, with the output expected to reach 2.5999 million mt.

DMC

According to SMM statistics, domestic silicone DMC production in July was 202,200 mt, down 1.84% MoM from June. The total output from January to July 2024 was 1.3676 million mt, up 15.21% YoY. In July, the supply side began to reduce output, with multiple producers starting maintenance, while new capacity installations were unstable, leading to a decline in operation rates. For the production forecast in August, SMM expects an increase due to the stabilization and full operation of newly commissioned capacities, resulting in increased supply. It is estimated that domestic DMC production in August will reach 217,500 mt.

Magnesium Ingot

According to SMM data, China's magnesium ingot production in July 2024 was 75,153 mt, up 4.7% MoM.

The production of magnesium ingots showed a slight upward trend in July. This month, there were both increases and decreases in production among smelters in the magnesium ingot market. The reasons for the decrease in magnesium ingot production in July are: firstly, the normal maintenance of magnesium ingot smelters during the summer, with a total of three magnesium ingot smelters undergoing maintenance, impacting production by less than 3,000 mt. Secondly, due to various factors such as overseas summer holidays and sluggish end-user demand, the operating rate of magnesium ingot customers remained low, leading to insufficient market transactions and continuous inventory buildup. Additionally, the market price of magnesium ingots was close to the breakeven point for various producers, with some even operating at a loss, prompting some producers to cut production to control the increasing inventory. The reasons for the increase in magnesium ingot production in July are: firstly, the resumption of production by magnesium ingot smelters that had undergone maintenance in May and June, leading to an increase in supply. Secondly, some producers adjusted their daily production based on their orders and inventory levels.

Recently, the overall magnesium ingot market in China has shown a stalemate between supply and demand. Due to sluggish downstream demand and the disproportionate risk to income in market operations, magnesium ingot trading companies have low stocking willingness, and the market lacks supportive factors. Industry insiders are generally bearish, resulting in insufficient momentum for magnesium ingot price increases. On the other hand, considering that the current magnesium ingot market price is close to the breakeven point for various plants, smelters are not willing to lower prices. It is expected that magnesium ingot prices will move rangebound in August. Some smelters will gradually shut down according to maintenance plans, and it is expected that the magnesium ingot output in August will stabilize at 75,000 mt.

Magnesium alloy

According to SMM data, China's magnesium alloy production in July 2024 was 31,700 mt, up 20% YoY.

In July, the operating rates of downstream processing enterprises for magnesium alloy decreased. The competition in processing fee quotations for magnesium alloy orders intensified, but the high aluminum prices significantly highlighted the cost-effectiveness of magnesium alloy, leading to a steady increase in end-user attention. Major magnesium alloy producers were operating at near full capacity. The reduction in production this month was due to some magnesium alloy producers scheduling maintenance during the high summer temperatures. The continued low-level consolidation of raw material magnesium ingot prices significantly highlighted the cost-effectiveness of magnesium alloy. Orders for magnesium alloy are expected to recover in August, and considering the gradual release of new production capacity from major magnesium alloy producers, SMM expects magnesium alloy production in August to recover to 33,000 mt.

Magnesium powder

According to SMM data, China's magnesium powder production in July 2024 was 6,100 mt, down 4.0% MoM and up 12.9% YoY.

The slight increase in July's magnesium powder production was influenced by several factors, including sluggish orders from magnesium powder companies and downstream enterprises' cautious attitude due to fluctuating magnesium ingot prices. As a result, some magnesium powder companies maintained low production levels. A representative from a large magnesium powder company stated that the weak domestic economic situation has led to thin steel mill profits and frequent changes in magnesium ingot prices, causing downstream buyers to be cautious. Considering that low-priced magnesium ingots might stimulate an increase in magnesium powder orders, SMM expects domestic magnesium powder production in August to remain at 6,000 mt.

Sponge Titanium

According to SMM data, China's sponge titanium production in July 2024 was 23,300 mt, with a MoM decrease of 1.7%.

In July, full-process sponge titanium enterprises maintained stable production, while other semi-process sponge titanium enterprises reduced their operating rates, leading to a slight MoM decrease in sponge titanium production.

The overall demand in the sponge titanium market did not meet expectations, and spot goods were not promptly delivered to end-users. After being smelted into titanium ingots, sponge titanium accumulated in the warehouses of titanium ingot enterprises, resulting in an unexpected increase in titanium ingot market inventory and a continuous decline in titanium ingot prices. The increasing supply of sponge titanium and the negative feedback from the titanium ingot market together put significant pressure on sponge titanium prices. Additionally, the firm quotations for titanium ore and magnesium ingots further exacerbated cost pressures. Under the dual pressures of inventory and costs, sponge titanium enterprises may choose to continue reducing production. According to SMM's forecast, sponge titanium production in August is expected to decrease to 23,000 mt.

Titanium Dioxide

According to SMM data, China's titanium dioxide production in July 2024 was 396,000 mt, with a MoM increase of 3.1%.

Due to the implementation of favorable policies in July and the boost in European demand, leading companies' orders on hand performed well. However, end-user demand remained weak. Some companies experienced a decline in shipments compared to the previous period, leading to increased market pressure. Despite high raw material costs, titanium dioxide market prices remained firm. Some companies conducted maintenance on their facilities, while most others returned to full-capacity production, resulting in a MoM increase of 3.1% in titanium dioxide production.

Due to limited market demand and continuous supply increase, some market participants remain pessimistic, and companies are generally observing market dynamics. However, considering the upcoming end of the overseas summer break in August, overseas demand may recover, and titanium dioxide companies are expected to resume full-capacity production after maintenance, with August production estimated to remain around 410,000 mt.

Light Rare Earths

In July 2024, domestic Pr-Nd oxide production was 7,550 mt, up 3% MoM. The decline was mainly reflected in the Hunan and Fujian regions.

According to SMM statistics, the separation plants scheduled to resume production in July have postponed their restart. However, downstream rare earth magnetic material orders improved relatively in July, and rare earth prices also rebounded, leading to an increase in the operating rate of some separation plants. According to some industry insiders, with the continued reduction in rare earth ore imports from the US, the operating rate of local separation plants in Sichuan is expected to start decreasing this month. It is anticipated that Pr-Nd oxide production in Sichuan will decrease MoM in August.

In July 2024, domestic Pr-Nd alloy production was 5,892 mt, down 1.7% MoM.

The rare earth market experienced significant price fluctuations due to news impacts, with insufficient actual transactions in the Pr-Nd alloy market. Some factories saw an accumulation of metal inventory, while rising ore prices led to a decrease in the circulation of low-priced oxides. Metal raw material restocking was hindered, and hot weather caused a reduction in factory operating rate in some regions. Based on current market transactions, downstream magnet material operating rate slightly improved in July, indicating actual demand for metal restocking. However, due to high rare earth prices, magnet material producers remained cautious. It is expected that with the gradual arrival of the peak season, demand for magnet materials will gradually increase, and Pr-Nd alloy supply will recover in August.

Medium-heavy rare earth

In July 2024, domestic production of dysprosium oxide was 226 mt, up 5.7% MoM, with the main increase reflected in Jiangxi and Inner Mongolia. Domestic production of terbium oxide was 42 mt, up 3% MoM, with the main increase reflected in Jiangxi and Fujian. Domestic production of gadolinium oxide was 317.5 mt, up 7% MoM, with the main increase reflected in Jiangsu and Jiangxi. Domestic production of holmium oxide was 49.1 mt, up 16% MoM, with the main increase also reflected in Fujian and Jiangxi.

According to SMM, in July, the supply of dysprosium and terbium was relatively large, and some producers were eager to sell-off for cash, leading to a rapid decline in the prices of dysprosium and terbium products in the first half of July. Currently, the supply of rare earth mines in Myanmar has not yet resumed, and most sellers are mainly selling previous inventories. According to some industry insiders, Myanmar's rare earth mines will resume production in mid-September. It is expected that the production of medium-heavy rare earth oxides in August will fluctuate less compared to July.

Molybdenum Concentrate

According to SMM statistics, China's molybdenum concentrate production in July was approximately 16,400 mt, down 4.8% MoM.

There are three main reasons for the production decline in July: First, some molybdenum mines in Hebei were under strict safety controls and have not yet resumed normal production; second, some molybdenum mines in Shaanxi and Inner Mongolia entered maintenance or technical renovation stages, temporarily limiting output; finally, molybdenum mines in Henan occasionally experienced a sudden drop in grade, affecting production. These factors combined led to the decline in molybdenum concentrate production.

Looking ahead to August, the molybdenum mines affected by the above factors are expected to resume normal production, and other mines have fewer concentrated maintenance plans. SMM expects molybdenum concentrate production in August to see a slight increase.

Ferromolybdenum

According to SMM statistics, China's ferromolybdenum production in July was approximately 14,000 mt, down 1.7% MoM.

In July, the domestic ferromolybdenum market faced two major challenges: on one hand, high raw material prices made it difficult for ferromolybdenum smelters to lock in sufficient quantities of raw materials at reasonable prices, leading operators to proactively reduce their operating rates; on the other hand, downstream steel mills, aiming to control costs, exerted significant pressure on ferromolybdenum procurement prices, resulting in a substantial reduction in ferromolybdenum profits, with many smelters even experiencing losses. Under this dual pressure, ferromolybdenum smelters had to reduce the acceptance of new orders to ease economic losses, leading to a slight decline in ferromolybdenum production.

Looking ahead to August, as the traditional peak consumption season approaches, downstream steel mills hold a relatively optimistic outlook and plan to increase the production of molybdenum-containing steel. Additionally, due to low molybdenum raw material inventories at steel mills, it is expected that the increase in production will stimulate demand for ferromolybdenum products, thereby driving an increase in production. SMM expects ferromolybdenum production to rise in August.

Ammonium Paratungstate (APT)

According to SMM statistics, China's APT production in July was approximately 10,300 mt, up 5.9% MoM.

In July, domestic APT spot inventory was at a low level, together with the demand for long-term contract deliveries, domestic APT smelters accelerated the resumption of production, driving the overall increase in APT output.

Entering August, the domestic APT market may see procurement demand after the end of overseas summer holidays and restocking demand from the downstream powder market. These factors will support further growth in APT production. According to SMM forecasts, domestic APT production in August is expected to continue to rise slightly.

Silver

In July, SMM1# silver production was 1,453.578 mt (including 990.578 mt from mining), up 15.964 mt from June, up 1.1% MoM, and up 7.6% YoY.

Nine companies increased their silver production in July. The reasons for the increase compared to June were: 1. Resumption of production after maintenance in July. 2. Increased silver content in raw materials. 3. High silver prices in early to mid-July stimulated market production. 4. The price of silver-containing materials fell in June compared to earlier periods, leading companies to increase recycling volume. 5. Companies adjusted production strategies.

Fifteen companies reduced their silver production in July. The reasons for the decrease were: 1. Some companies started maintenance in July. 2. Fluctuations in raw material content. 3. Silver prices fell in mid to late July, leading some companies to adjust production and shipment strategies.

The increase in silver production in July was higher than the decrease, resulting in a slight overall increase. However, since mid-July, silver prices have plummeted, and the decline continued into August. Due to price fluctuations and maintenance in July and August, it is estimated that production in August will see a slight decline.

Silver Nitrate

In July, the production of silver nitrate saw a slight pullback compared to June. The production of silver nitrate by domestic companies with production and sales qualifications was 730 mt in July, up 1.4% MoM but down 6.5% YoY. The production in July increased slightly MoM. In the first half of the month, due to rising prices, market procurement and stocking demand were not high. In the latter half of the month, as prices fell, the situation of market orders improved. However, since the operating rate of downstream companies remained relatively stable, market demand was relatively stable, and the procurement of raw materials was relatively stable, resulting in a steady increase in production. The YoY decrease in production was due to last year's market N-type reconstruction and market expansion, amplifying the demand in the industrial chain and generating a large demand for raw materials. However, the market expansion far exceeded end-user demand, resulting in a YoY decrease in production.

Antimony Ingot

According to the SMM survey, China's actual production of antimony ingots (including antimony ingots, crude antimony conversion, antimony cathode, etc.) in July 2024 was 5,786.943 mt, a MoM decrease of 11.78% compared to June's 6,559.3 mt. Specifically, among the 33 surveyed producers, 11 had halted production, 3 fewer than last month; 19 showed reduced production, 4 more than last month; and 3 maintained normal production, 1 fewer than last month. From the perspective of antimony ingot production, July marked the first time in recent periods that production fell below 6,000 mt. However, many market participants believe that the actual decline in July's antimony ingot production was less than expected. Given the production plans from late June to early July, many producers had a pessimistic outlook on operating rates. This suggests that some producers might be depleting their raw material inventories, and competition for antimony raw materials will become increasingly fierce. Therefore, some market participants predict that the market for antimony raw materials will remain strong, but it is also possible that China's antimony production in August will continue to decline. SMM expects that the national antimony ingot production in August 2024 may still decrease compared to July, but stability cannot be ruled out.

Note: Since May 2022, SMM has been publishing the national production of antimony ingots (including antimony ingots, crude antimony conversion, antimony cathode, etc.). Thanks to SMM's high coverage rate in the antimony industry, the total number of surveyed antimony ingot producers is 33, distributed across 8 provinces nationwide, with a total sample production capacity exceeding 20,000 mt and a total capacity coverage rate of over 99%.

Sodium Antimonate

According to SMM's survey of major sodium antimonate producers in China, the production of first-grade sodium antimonate in China in July 2024 was 3,270 mt, down 6.44% MoM from 3,495 mt in June. Looking at the production changes in Q2, after falling below 4,000 mt in April, it continued to decline in May, approaching 3,000 mt. However, after a significant rebound in June, it showed a downward trend again in July. Market participants believe that the current rise in antimony prices to a historical high has led to a significant increase in capital occupation for downstream manufacturers. As a result, the increased financial pressure on downstream companies has had some impact on production, which is a normal phenomenon. Additionally, the slight fluctuations in production during the summer are also considered normal. According to informed sources, despite the apparent weakening trend in the production of first-grade sodium antimonate due to the sharp rise in antimony prices, the production of non-first-grade products has actually increased. It is reasonable for companies to make some industrial adjustments with the aim of cost reduction.

In terms of detailed data, among the 11 surveyed producers by SMM, 2 were in a state of shutdown or testing in July, while the production of most other sodium antimonate producers remained stable or declined, leading to an overall decrease in production. Regarding the situation of glass manufacturers, nearly 10 production lines of Follett, Jinxin Solar, Liande Photovoltaic, and Taide Optoelectronics underwent cold repairs at the end of July, which may affect the procurement of sodium antimonate. SMM expects that the production of first-grade sodium antimonate in China in August will likely stabilize, but a further decline cannot be ruled out.

Note: Since July 2023, SMM has been publishing the national sodium antimonate production data. Thanks to SMM's high coverage rate in the antimony industry, the total number of sodium antimonate producers surveyed by SMM is 11, distributed across 5 provinces in China, with a total sample capacity exceeding 75,000 mt and a total capacity coverage rate as high as 99%.

Refined Bismuth

According to SMM's survey of bismuth producers nationwide, China's refined bismuth output in July 2024 was 1,836.484 mt, showing a slight decline. Compared to the national refined bismuth output of 1,812.953 mt in June 2024, it was up 1.3% MoM. After three consecutive months of rebound from April to June, the output continued its upward trend in July, although the increase was modest. From the producers' production situation, the previously tight raw material supply has improved. Market participants generally expected the stable rebound in July's output, which is also related to the resumption of production by many producers in Hunan after the completion of inspections by the central environmental protection inspection team. Additionally, the recent significant rise in bismuth prices has somewhat boosted producers' processing enthusiasm, leading to a gradual increase in output.

From the detailed data, among the 24 surveyed producers by SMM, only three saw a significant decline in output in July, and one producer halted production; however, six producers experienced a significant increase in output. This resulted in the overall refined bismuth ingot output in July still maintaining an upward trend compared to the previous month. However, some market participants indicated that due to the record high bismuth prices, the supply of bismuth raw materials might remain tight in the future. Therefore, tight raw material supply is one of the reasons that cannot be ignored for potential fluctuations in output. Consequently, SMM expects that the national refined bismuth output in August 2024 is likely to stabilize, with a possibility of a slight rebound. However, it is still challenging to surpass 2,000 mt in the short term.

Note: Since October 2022, SMM has been publishing the national refined bismuth output. Thanks to SMM's high coverage rate in the bismuth industry, the total number of surveyed refined bismuth producers is 24, distributed across eight provinces nationwide, with a total sample capacity exceeding 50,000 mt and a total capacity coverage rate of over 99%.

Lithium Carbonate

According to SMM statistics, the total domestic production of lithium carbonate in July (including recycling) was 64,960 mt, down 1.94% MoM, up 43.36% YoY. From January to July, the cumulative domestic production of lithium carbonate was 363,424 mt, up 46.10% YoY. By raw material, the total production of lithium carbonate from spodumene in July was 30,300 mt, up 1.7% MoM. Most spodumene-based lithium salt plants maintained a high and stable operating rate in July. However, some non-integrated spodumene-based lithium salt plants saw a decline in production due to weak downstream demand and the risk of losses. Meanwhile, some leading lithium salt plants completed maintenance and technical upgrades in July, resulting in increased production. Overall, the production of lithium carbonate from spodumene increased by 1.7% MoM in July. The total production of lithium carbonate from lepidolite in July was 15,600 mt, down 12.3% MoM. Although some non-integrated lepidolite-based lithium salt plants experienced losses earlier, they did not significantly reduce production in June due to cash flow considerations. However, continued price declines made it difficult for these plants to sell their products, leading to production cuts. As a result, the production of lithium carbonate from lepidolite decreased by 12.3% MoM in July. The total production of lithium carbonate from salt lakes in July was 13,300 mt, up 2.5% MoM. July remained a peak production period for salt lake-based lithium salt plants, with a high operating rate. Additionally, new lithium salt plants started production in early July, contributing to the total production of lithium carbonate from salt lakes. The total production of recycled lithium carbonate in July was 5,760 mt, up 1.1% MoM. The high price of recycled scrap led many recycling plants to reduce or halt production. However, some recycling plants saw an increase in production due to stable outsourcing orders and the need to deliver futures contract in July. Overall, the total production of recycled lithium carbonate increased slightly.

In August, the risk of losses is expected to continue affecting some lithium salt plants, leading to anticipated production cuts. Except for salt lake-based lithium salt plants, which are expected to maintain a stable operating rate, production from other raw material sources is likely to be impacted. The total domestic production of lithium carbonate in August is expected to be 63,110 mt, down 2.8% MoM.

Currently, downstream material plants have increased their inquiries, but the expected transaction prices are close to market prices, which still differ from the psychological expectations of most lithium salt plants. Additionally, material plants' long-term contracts and customer supplies are sufficient for daily production, so there is no urgent need for restocking, and transaction activities have not significantly increased. On the supply side, lithium salt plants continue to have a firm stance on pricing, but generally hold a bearish outlook for the future, leading to slight price reductions. Some lithium salt plants face the risk of losses and have plans to reduce production. In contrast, material plants' production schedules for August have slightly increased. It is expected that the domestic supply surplus of lithium carbonate may slightly ease, but prices are likely to remain weak.

Lithium Hydroxide

In July 2024, China's lithium hydroxide production reached 32,300 mt, down 8.3% MoM, up 21% YoY. By raw material type, the production of lithium hydroxide using smelting method in July reached 29,000 mt, down 9.5% MoM, up 31.6% YoY. The production of lithium hydroxide using causticisation method reached 3,300 mt, up 3% MoM, down 28% YoY.

Supply side, in July, China's production of lithium hydroxide using smelting method showed a downward trend, while that using causticisation method slightly increased. The overall scheduled production of lithium hydroxide using causticisation method remained stable with slight growth, mainly due to the ramp-up of production after the completion of a major producer's production line adjustment, but the operating rate of most lithium hydroxide producers using causticisation method remained low. Additionally, lithium hydroxide producers using smelting method saw a significant reduction in July due to decreased demand and maintenance.

Demand side, in July, orders from major ternary cathode material producers increased significantly, leading to a substantial increase in overall scheduled production and a rebound in demand for lithium hydroxide. Major producers saw a notable increase in July. The production of ternary cathode materials in July was 59,000 mt, up 20% MoM from June's 49,000 mt; the increases for the 6-series and 8-series were 5% and 40%, respectively, with high-nickel showing the highest increase. Most cathode material producers maintained a high proportion of over 50% of lithium hydroxide supplied by customers, and long-term contracts were generally enough to sustain production, resulting in low sentiment for spot orders. SMM expects that lithium hydroxide production in August will reach 33,600 mt, up 4% MoM, up 32% YoY, mainly due to the completion of maintenance and production ramp-up at a major producer in Jiangxi, leading to a slight increase in August's lithium hydroxide production.

Cobalt Sulphate

In July, China's cobalt sulphate production was 5,317 mt in metal content, down 7% MoM and 37% YoY. The main reasons for the production decrease in July were: on one hand, although the downstream ternary cathode precursor production increased, the demand was more focused on medium-nickel and high-nickel materials, leading to limited recovery in cobalt demand. On the other hand, due to high market inventory and low spot prices, cobalt sulphate smelters reduced production under the pressure of losses.

In August, the overall supply and demand pattern is expected to remain unchanged, with the market likely focusing on destocking. Therefore, production is expected to continue to decline, with an estimated output of about 5,089 mt in metal content, down 4% MoM and 31% YoY.

Co3O4

In July, China's Co3O4 production was 7,710 mt, up 2% MoM, down 8% YoY. The main reason for the increase in July production was the higher downstream purchasing willingness due to new mobile phone models in Q3 and low cobalt prices, leading to a rebound in Co3O4 demand, thus maintaining an upward production trend. It is expected that in August, downstream demand will still see a slight increase, so Co3O4 demand will remain stable, and production scheduling will remain stable. The estimated Co3O4 production in August is about 7,760 mt, up 1% MoM, up 5% YoY.

Ternary cathode precursor

In July 2024, China's ternary cathode precursor production was approximately 63,380 mt, up 8% MoM and down 18% YoY. From January to July, the cumulative production was 470,010 mt, with a YoY increase of 7%.

Supply side, the low level of cathode shipments in June led to some inventory accumulation for precursor producers. Additionally, due to the low prices of metal salts, the self-initiated stockpiling by precursor producers might have partially consumed the demand for August. Demand side, cathode demand rebounded in July, with cathode producers fulfilling just-in-time orders, and some end-users' incremental orders driving up cathode demand, which in turn boosted precursor production. Overall, precursor production showed an upward trend in July.

In August 2024, demand side, cathode demand is expected to increase by 3%, and precursor producers will continue to schedule production based on sales, leading to a slight increase in precursor output. Supply side, precursor producers are starting to prepare inventories for the upcoming peak season in September and October. Some producers' scheduled production in August will be flat or slightly increase compared to July. Overall, precursor production in August will continue to rebound, but the growth will be limited. It is expected that in August 2024, China's ternary cathode precursor production will be 65,765 mt, up 4% MoM and down 18% YoY.

Ternary Cathode Materials

In July 2024, China's ternary cathode materials production reached 58,845 mt, up 19% MoM and 3% YoY, up 13% YoY for the January-July period. In terms of supply, some ternary cathode materials manufacturers reduced production in July due to weak overseas demand. However, driven by leading high-nickel manufacturers actively building inventories and resuming large-scale production, the overall domestic production of ternary cathode materials increased significantly in July. In July, the proportion of 5-series ternary materials was 28%, 6-series was 29%, and 8-series was 39%, with the proportion of high-nickel materials increasing compared to the previous month. Ronbay, Ruixiang, and Brunp ranked as the top three in ternary cathode materials production in July, with CR3 at 45%, CR5 at 55%, and CR10 at 74%, indicating an increase in market concentration compared to June. Demand side, ternary battery cell production in July was 27 GWh, up 9% MoM. The procurement demand for ternary cathode materials from leading battery cell manufacturers improved, and the sales expectations for related new energy vehicle models in the upcoming September-October peak season are positive. Due to the impact of the new national standards, the demand for ternary battery cells used in two-wheelers decreased, leading to fewer orders. The demand for power tools recovered compared to the same period last year, with current orders remaining stable. The demand for digital and 3C products remained weak.

In August 2024, China's ternary cathode materials production is expected to reach 60,905 mt, up 4% MoM and 8% YoY. The production of ternary cathode materials in August is expected to increase slightly. Except for a few manufacturers adjusting their production schedules and slightly reducing output, most manufacturers are expected to maintain stable or slightly increased production in August.

Iron Phosphate

In July, China's iron phosphate production was 148,000 mt, stable MoM, up 21% YoY. While overall production in July did not change much compared to June, there were increases and decreases among producers. The increase was mainly due to higher order demand from downstream customers, leading to full capacity utilization. The decrease was due to equipment maintenance or significant losses per ton of iron phosphate, with some producers reducing production due to financial pressure and rejecting low-price orders to maintain normal operations. Different producers faced varying situations, with differences in downstream customer groups, leading to varied actual production conditions.

On the cost side, prices of industrial ammonium and phosphoric acid softened in July, leading to lower costs; the price of iron phosphate also softened compared to before. Market expectations for August are gradually strengthening, with iron phosphate production expected to continue increasing driven by demand from downstream cathode materials and battery cells. It is estimated that China's iron phosphate production in August will be 153,200 mt, up 4% MoM, up 26% YoY.

LFP

In July, China's LFP production was 193,710 mt, up 8% MoM and 40% YoY. Supply side, July's LFP production increased compared to June, with some LFP producers resuming energy storage orders. This was mainly due to the gradual release of demand from some overseas energy storage projects. In H2, overseas energy storage projects may see a rush of installations. Additionally, the demand growth in the NEV market remained relatively flat, as some major models of new energy vehicle companies are plug-in hybrids or range extenders, which reduces the demand for LFP batteries and weakens the demand for LFP cathodes. Moreover, the increase was mainly contributed by second and third-tier LFP cathode producers, who received more orders in July, while leading companies maintained a high operating rate. The market in July still experienced price wars, with lower-priced and quality-assured companies more likely to be favoured by battery cell manufacturers.

In August, LFP scheduled production is expected to continue growing compared to July, driven by demand, with high operating rates across companies. It is estimated that China's LFP production in August will be 209,740 mt, up 8% MoM and 61% YoY.

Lithium cobalt oxide (LCO)

In July, LCO production was 7,970 mt, down 1% MoM, up 6% YoY. From January to July, LCO production totaled 48,800 mt, with a cumulative YoY increase of 22%. Supply side, the LCO market continued to diverge. Leading high-voltage LCO manufacturers maintained high operating rates, ensuring stable delivery of long-term orders. The low-voltage LCO market continued its price war, with second-tier manufacturers adopting volume discount strategy. However, due to the shrinking downstream segmented demand, second-tier manufacturers had poor operating rates. Demand side, end-users stocked up for H2 new model releases, maintaining strong demand for high-voltage LCO material. Overall, July LCO production was better than expected. August LCO production is expected to be 7,990 mt, flat MoM, up 18% YoY.

LMO

According to SMM data, China's LMO output in July 2024 was 9,294 mt, down 4.10% MoM and 7.73% YoY. The survey indicated that LMO production in July continued the downward trend from June. The main reasons were the significant and prolonged drop in lithium carbonate spot prices, leading to a decline in LMO market prices. Additionally, intense market competition resulted in relatively chaotic pricing and price suppression, further squeezing producers' profit margins and contributing to heavy market pessimism. Out of caution, producers significantly reduced their production and shipment volumes. Demand side, it remained the traditional off-season, and downstream companies were still in the destocking phase, with few new orders. Due to the combined impact of raw materials and demand, overall LMO output declined.

It is expected that in August, the LMO overcapacity situation will remain difficult to alleviate, with continued market competition. Mid-to-late August may see a slight increase in downstream procurement demand, potentially driving a small rebound in scheduled production, but the overall market environment will remain sluggish. Therefore, it is estimated that the total output in August will be around 9,897 mt, down 6.49% MoM and 23.08% YoY.