SMM Analysis On China July Lithium Hydroxide Production And August Forecast

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.