【SMM Analysis】China's production of ternary cathode precursor increased 12% MoM in August, with a forecasted increase of 6% in September

In August 2024, the production of ternary cathode precursor in China increased 12% MoM and decreased 2% YoY. As of now, the cumulative YoY increase in China's ternary cathode precursor production from January to August stands at 6%.

Supply side, cathode material merchants returned to normal procurement rhythm, and precursor producers scheduled production based on sales. Price wars in the ternary precursor market remained intense, with companies rich in upstream resources leveraging their advantages to offset some costs. Some producers chose to abandon low-priced orders after weighing factors like profit and cost. In August, it was evident that orders were significantly adjusted among precursor companies. The increase in precursors was still concentrated among leading enterprises, while small and medium-sized enterprises saw slight increases, stable production, or even suspension and reduction in production.

Demand side, the traditional peak sales season prompted cathode material merchants to restock as needed, with strict control over inventory levels. Market demand did not show significant signs of increase, and order adjustments in the cathode market also provided some increment to the precursor market. Overall, the production of ternary cathode precursor in August rose slightly.

In September 2024, demand side, cathode material production might see a slight decline, while precursor production is expected to maintain a rising trend with a slower growth rate. However, the incremental stocking in September might deplete the October demand for precursors. Supply side, despite the rise in precursor production in August, the growth rate was lower-than-expected, failing to deliver the positive signals usually associated with the "September-October peak season." Overall market sentiment remained cautious, and precursor companies might continue to track market changes to adjust production plans accordingly. As a result, precursor production in September will likely continue to rise, but the pace might slow due to insufficient downstream demand.

It is expected that the production of ternary cathode precursor in China in September 2024 will increase by 6% MoM and 4% YoY.