SMM Analysis On China July Ternary Cathode Precursor Production And August Forecast

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.