SMM Analysis Of China LFP Production In May And Forecast For June

In May, China's LFP production was 197,610 mt, up 18% MoM and 78% YoY. On the supply side, LFP producers reported good operating conditions in May, with leading producers nearing full production. Second and third-tier LFP producers were ramping up some capacities while also exploring new customers to gain additional orders. On the demand side, the energy storage market contributed significantly to the demand increase in May, while the growth rate of the NEV market demand slowed. When placing orders for LFP, some downstream battery cell manufacturers shifted from NEV to energy storage market. The total LFP demand in May maintained an upward trend.

In June, downstream end-users and battery cell manufacturers focused on reducing inventory. As a result, upstream cathode producers are expected to see a MoM decline in orders. Market feedback indicates a decline in demand expectations, and LFP producers will accordingly adjust their production schedules. Orders for LFP in the NEV market are expected to decline significantly in June, while the incremental demand from the energy storage market will have a limited impact on the total LFP demand. China's LFP production in June is estimated to be 181,960 mt, down 8% MoM and up 29% YoY.