China's December 2023 lithium battery cell production declined, falling inventory-to-sales ratio suggests the battery segment is still in a de-stocking phase

China's December 2023 lithium battery cell production hit 69.04 GWh, down 12% MoM and 7% YoY. Ternary battery cell output was 21.37 GWh, down 8% MoM and 20% YoY. LFP battery cells reached 43.27 GWh, down 13% MoM but up 1% YoY. January 2024's forecast is 64.46 GWh, down 7% MoM but up 14% YoY.
Demand side, in the EV sector, year-end auto sales pushes increased new energy vehicle sales, but growth was slower than in past years. Dealer inventories rose, indicating a minimal actual demand increase. The traditionally slow Q1 of 2024, plus high inventories in the battery cell segment and at dealerships, resulted in fewer orders for battery cell manufacturers. In the energy storage sector, the battery cell industry is still reducing production and depleting inventory this month. With domestic integrators focused on system delivery in December, the prior demand peak for battery cells has subsided, leading to decreased domestic demand. Europe is de-stocking, U.S. system installations are delayed, and emerging markets aren't boosting demand, causing a persistent global energy storage downturn.
As of December 2023, China's battery cell inventory was 164.57 GWh, down 9% MoM. The inventory-to-sales ratio was 2.03 months by December's end, down 11% MoM, showing ongoing industry de-stocking.