SMM Analysis Of China Lithium Hydroxide Production In May And Forecast For June

In May 2024, lithium hydroxide production in China reached 36,320 mt, up 2% MoM and 45% YoY. By raw material type, the smelting method produced 32,400 mt, up 3% MoM and 60% YoY, while the causticizing method produced 3,900 mt, down 4% MoM and 20% YoY.

From the supply side, most lithium hydroxide enterprises maintained high scheduled production levels in May, mainly due to low inventory levels at the beginning of the month. Some lithium hydroxide manufacturers faced significant delivery pressure due to insufficient inventory, driving them to raise production. The smelting method saw a slight increase in production, mainly due to an increase in OEM orders from overseas and the continuous ramp-up at some enterprises. In contrast, the causticizing method saw a decline in production, mainly because the current price inversion between lithium hydroxide and lithium carbonate made production unprofitable, forcing some causticizing enterprises to cut their production. Additionally, some OEM orders for the causticizing method shifted to the smelting method.

On the demand side, in May, high-nickel cathode material plants saw a significant increase in customer-supplied lithium hydroxide from downstream battery producers. However, due to weakening market expectation for high-nickel ternary materials, battery cell producers significantly reduced orders for ternary cathode materials. This led some high-nickel ternary material enterprises to prefer executing a raw material destocking strategy, tightening their lithium hydroxide purchases. As the NEV market gradually enters the off-season, lithium hydroxide demand is expected to continue its downward trend. SMM forecasts that lithium hydroxide production in June will reach 35,550 mt, down 2% MoM and up 45% YoY.