According to SMM, China's lithium hydroxide production in December 2024 saw a significant MoM decline of approximately 22%, while it was up 15% YoY.
Supply side, from the perspective of raw material types, smelting output decreased by about 23% MoM and increased by 20% YoY. On one hand, over the past two months, due to the high proportion of long-term contracts in the market, spot order demand for lithium hydroxide has been limited. Although lithium chemical producers have stood firm on quotes, price increases have been slow. Coupled with raw material prices remaining high due to mines standing firm on quotes, the smelting cost losses have not significantly improved. Some lithium chemical plants have started focusing solely on fulfilling long-term contracts to achieve destocking. On the other hand, due to weak downstream demand, some major lithium chemical producers have reduced orders under tolling agreements. Combined with maintenance activities at lithium chemical plants since December, smelting output has seen a significant MoM decline.
Causticisation output remained flat MoM as orders under tolling agreements showed no significant changes, and ramp-up of new production lines fell short of expectations.
Demand side, ternary cathode material production this month decreased by about 7% MoM. Due to the continued decline in 5-series production, the share of 8-series increased to 40%. Overall performance, driven by end-user rush for installations, was better than the same period in previous years.
Export side, according to customs data, China's lithium hydroxide exports in November reached 5,494 mt, down about 30% MoM and 64% YoY. Exports to South Korea and Japan were 3,609 mt and 1,615 mt, accounting for 66% and 29% of China's total exports, respectively. These figures represented MoM declines of 37.4% and 4.8%, and YoY declines of 70% and 36%, marking the lowest levels in the past three years. Overseas terminal sales in recent months have fallen short of expectations, coupled with inventory buildup, leading to a continued decline in export volumes over the past few months.
In summary, with supply-side declines significantly outpacing demand-side declines in December, there was a notable destocking trend during the month. Looking at the production schedule for January 2025, most lithium chemical companies are expected to undergo maintenance, leading to a continued weakening of market supply. January production is expected to decrease by over 10% MoM and more than 5% YoY, with destocking trends expected to persist throughout the month.
