China’s LCO Production Review In July And Forecast In August

SHANGHAI, Aug 10 (SMM) –

In July, China's lithium cobalt oxide (LCO) production registered at 6,673 mt, experiencing a contraction of 13% compared to the previous month, while showcasing an 18% surge on a year-on-year basis. After a mid-year production ramp-up, LCO cathode manufacturers witnessed a downturn in their total output for July relative to June. Yet, it's notable that the production concentration among industry-leading entities remained high, showing marginal divergence from June's data. Triggered by considerable price fluctuations in upstream raw materials during July, these LCO cathode producers embarked on a strategic path to minimize their inventory holdings, thereby mitigating associated risks.
From a demand perspective, digital requirements in July were relatively subdued, leading to a dampened purchasing intent among downstream battery factories. These entities clung to long-term contracts, with spot orders being on the lower side. Furthermore, they aligned their procurement of cathode materials with sales orders, which resulted in increased procurement frequency, but each with a smaller volume.
Looking ahead, the digital market is projected to maintain its lukewarm trend in August. The typical surge in consumer market driven by the back-to-school season was absent this year, failing to create a demand spike. However, the launch of new products in September might breathe life into the LCO market. Production in August is anticipated to scale down from July, with a forecasted output of 6,398 mt, marking a 4% decrease month-on-month but achieving a 13% increase year-on-year.