SMM

China's December LFP production was 95,010 mt, down 17% MoM and 6% YoY, but the full-year output rose 30% YoY. Weakened demand reduced LFP production. Falling primary raw material prices spurred destocking, prompting essential LFP purchases by battery cell companies. December saw key raw material prices like lithium carbonate and iron phosphate drop, lowering LFP manufacturing costs. LFP producers in December aligned production with sales, exercising caution with their scheduled production due to concerns about downstream order cancellations. These companies prioritized inventory reduction, maintaining production only to meet essential demand. Battery cell companies, especially in EV and energy storage, aiming to clear stock, extended delivery times and ordered less LFP material.
Q1 2024 is the industry's off-season with low LFP demand and market pessimism. The market is slow, and many LFP firms plan to begin their Spring Festival breaks 1-2 weeks early. Logistics limits during the festival cause January stockpiling. Estimated China's January 2024 LFP output is 97,310 mt, up 2% MoM and 51% YoY.