SMM Analysis On China October LCO Production And November Forecast

In October, China LCO production declined, down 15% MoM from September. The production schedule of LCO was mainly dominated by a few top-tier enterprises, with the CR5 accounting for about 90%, indicating that the market still maintained a high level of concentration. Downstream demand weakened due to the slow consumption of new inventory, but this had little impact on top-tier enterprises, whose operating rates remained stable. The production decline was more significant among small and medium-sized enterprises due to a drop in orders. Currently, the prices of main materials are still at low levels, and with weakening demand, costs are difficult to support effectively. It is expected that LCO prices will continue to decline slowly. The production schedule for LCO in November is expected to weaken further, down 7% MoM from October.