SMM Analysis On China October LFP Production And November Forecast

In October, China's LFP production increased 4% MoM and was up over 100% YoY. Supply side, leading and second-tier LFP cathode companies operated at high capacity, with most companies' operating rates above 80%, resulting in October's LFP supply hitting a new high compared to September. LFP companies saw a significant increase in orders at the end of Q3 and the beginning of Q4, with listed companies pushing for year-end volume. Previously, due to low processing fees from battery cell manufacturers, less production meant less loss, leading to low production enthusiasm. This increase in production is a result of companies balancing shipments and revenue for 2024. Demand side, downstream battery cell manufacturers' orders continued to increase in October, with NEV and energy storage maintaining strong demand. NEV market, many new car models were launched earlier, and year-end is the peak season for NEV market price promotions. Automakers and battery cell manufacturers may prepare inventory for early 2025 considering factors like subsidy reductions next year and the Chinese New Year holiday. Energy storage market, the domestic grid connection deadline (December 30) and numerous new overseas energy storage projects drove demand. Overall, LFP saw a significant market increase in October, and November is expected to differ from previous years, with production not decreasing but increasing, estimated to be up 7% MoM and up 145% YoY.