The drop in output however was in line with market expectations, sources told Fastmarkets.
Before the CABIA data was released, market participants told Fastmarkets that some NCM batteries cathode producers were heard to cut their output by 20% to 40% in June from their May level amid withering downstream purchasing appetite.
The weak NCM sector resulted in thin spot liquidity of lithium hydroxide in recent months, with sources citing that there had been dismal spot demand for the material.
Fastmarkets’ price assessment for lithium hydroxide monohydrate LiOH. H2O 56.5% LiOH min, battery grade, spot price range exw domestic China was 80,000-85,000 yuan ($11,030-11,719) per tonne on July 11, down 13,000 yuan per tonne from the 91,000-100,000 yuan per tonne on June 6.
Amid the poor performance of the NCM sector, China’s lithium hydroxide price remained at a discount to lithium carbonate in June, with the country’s lithium iron phosphate (LFP) batteries continuing its dominance over NCM batteries, sources told Fastmarkets.
Fastmarkets assessed lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China at 88,000-90,000 yuan per tonne on July 11, down by 10,750 yuan per tonne from the 98,000-101,500 yuan per tonne on June 6.
The price gap between the two lithium salts was 6,500 yuan per tonne on average as of July 11, wider than the 4,250 yuan per tonne on June 6.
China’s output of LFP batteries grew 5.4% month on month to 63.8 GWh in June, with its market share further up to 75.5% from the 73.1% in May, according to CABIA.
However, NCM batteries’ market share dropped to 24.3% in June, down from the 26.6% in May, CABIA data showed.
LFP has been the traditional dominant battery chemistry in China’s market due to its lower costs, higher stability and safer performance than NCM.
“Cheaper production costs and wider scope of utility could support LFP [batteries] to further extend its dominance over NCM [batteries] in the future,” a second producer source.
The weakness in China’s domestic lithium hydroxide price bled into to the overseas market, contributing to the hydroxide price weakness in the CIF China, Japan and Korea (CJK) market, a trader source told Fastmarkets.
“The illiquid domestic market forced [China’s lithium hydroxide producers] to offer lower prices for spot deals shipped to Japan and South Korea,” he said, noting that few deals were heard made even at such low prices.
Fastmarkets’ daily price assessment of lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was $11.2-12.5 per kg on July 11, down $1.7 per kg from the $13-14 per kg on June 11.
Market participants still hold a bearish outlook in NCM market for the coming months, sources said.
Some restocking of lithium hydroxide among downstream Chinese NCM cathode producers has been seen recently, however, sources told Fastmarkets, but it is not expected to support hydroxide prices due to a lack of real demand.
A lithium chemical producer said that the operational rate of NCM batteries cathode producers will continue to stay at a low level.
“It’s not possible to see a sudden pick up in the near future,” the source said.
Another trader source also showed a pessimistic attitude toward the NCM battery market in July and August.
“I cannot see any strong positive signals soon for the NCM market,” the trader source said, adding that this may change in August.
The post China’s June NCM battery output down for third consecutive month appeared first on Fastmarkets.
