【SMM Steel】US industry groups expressed serious concern over growth of global steel overcapacity. China's removal of VAT export rebates and Brazil's reinstatement of import tariffs on certain steel types could redirect surplus volumes to North America. Global overcapacity could exceed 680Mt by end-2025, with growth rates at 15-year highs, creating long-term pressure on prices and margins. Trade tensions between major economies are intensifying. Ukrainian metal companies should monitor these signals and prepare for continued instability through 2026.

The domestic EV market has seen a significant increase in orders, driven by the concentrated launch of new vehicle models.

Around April 23, 2026, import and export data for cobalt and lithium battery industry chain products in March were released. Data showed that March spodumene imports rebounded significantly from February, hitting a new record high of 837,400 mt in physical content. Lithium carbonate side, China imported 29,974 mt of lithium carbonate in March, up 13% MoM and up 65% YoY.......SMM compiled the import and export data for battery materials as follows: Upstream Lithium Concentrates Customs data showed that March spodumene imports rebounded significantly from February, hitting a new record high of 837,400 mt in physical content. By source country: African ore arrivals increased notably — Nigeria imports reached 125,100 mt, up 63% MoM; Zimbabwe shipments from earlier periods arrived at ports in the month totaling 112,600 mt, up 61% MoM; Canada broke the zero-import situation in January-February with 58,600 mt arriving in March; while Australian ore volumes declined MoM due to shipping schedule impacts. According to SMM's screening and analysis, total port arrivals this month were equivalent to 81,000 mt LCE. Lithium concentrates accounted for 72% of the month's imports, down slightly compared to the same period last year, mainly due to the notable increase in South African raw ore port arrivals recently. Notably, driven by prices and local beneficiation plant development, Nigerian ore volumes increased significantly, with not only raw ore volumes rising markedly but also concentrates share increasing notably YoY. Source: China Customs, compiled by SMM Spodumene concentrates (CIF China) spot pricing side, according to SMM spot prices, March spodumene concentrates (CIF China) spot prices showed a V-shaped trend, dropping to a low of $2,028/mt at month-end, then rebounding to $2,313/mt at month-end, with a monthly average of $2,081.4/mt. According to SMM, in March, spodumene and lepidolite profit trends diverged, with structural cost differences among lithium chemicals enterprises becoming evident. Available spodumene volumes were tight, ore traders held back from selling, and inventory continued to be drawn down. Enterprises purchasing spodumene externally suffered losses on spot margins throughout the month, with non-integrated enterprises facing greater difficulties in hedging and procurement. Entering April, spodumene concentrates (CIF China) spot prices also showed a pattern of initial decline followed by recovery. Recently, spodumene concentrates prices continued to probe higher. As of April 27, spodumene concentrates (CIF China) spot prices rose to $2,507/mt, up $194/mt from $2,313/mt at end-March, an increase of 8.39%. According to SMM's recent research, driven by market expectations of improving future demand, speculative sentiment in the lithium carbonate futures market remained strong, pushing futures prices up. Lithium ore merchants showed increased willingness to sell, with pricing-against-futures prices staying high. Looking ahead, lithium chemical plant operating rates stay high, with demand for lithium ore continuing to climb. Meanwhile, Zimbabwe has suspended spodumene exports for nearly two months, leading to persistently tight available lithium ore supply in the market. Overall, spodumene prices are expected to hold up well. Lithium Carbonate According to customs data, China imported 29,974 mt of lithium carbonate in March, up 13% MoM and up 65% YoY. By source, the top 3 were Chile (18,000 mt, 61%), Argentina (8,292 mt, 28%), and Indonesia (2,100 mt, 7%). From January to March, China's cumulative lithium carbonate imports reached 83,000 mt, up 65% YoY cumulatively. China exported 448 mt of lithium carbonate in March, down 25% MoM and up 104% YoY. From January to March, China's cumulative lithium carbonate exports totaled 1,516 mt, up 46% YoY cumulatively. According to SMM spot quotes, lithium carbonate showed a volatile trend of first declining then rising in March. As of March 31, the average spot price of battery-grade lithium carbonate was quoted at 163,000 yuan/mt, with a monthly average price of 156,700 yuan/mt. According to SMM analysis, spot lithium carbonate prices in China showed a significantly volatile upward trend in March, with the monthly average price up 5% MoM. Fundamentals-wise, supply side, production gradually recovered as maintenance ended, and lithium chemical plants showed increased willingness to sell spot orders at the relatively high level around 170,000 yuan/mt; demand side, downstream cathode material producers basically adopted a dip-buying strategy, with strong purchase willingness at price levels around 140,000 to 150,000 yuan/mt. As demand continued to improve, some enterprises engaged in large-scale restocking at low levels. In March, battery-grade spot lithium carbonate prices rose to 172,500 yuan/mt at the beginning of the month and pulled back to around 163,000 yuan/mt at month-end. Recently, battery-grade lithium carbonate spot quotes stayed high above 170,000 yuan. As of April 28, battery-grade lithium carbonate spot quotes were at 172,000-177,000 yuan/mt, with an average price of 174,500 yuan/mt. According to SMM, in today's spot lithium carbonate market, as lithium carbonate prices declined, downstream purchase enthusiasm picked up, with some buyers' target prices basically around 170,000 to 175,000 yuan/mt; upstream spot order quotes remained at high levels. Overall, market inquiries and transactions were relatively active. Looking ahead, the supply side presents mixed signals: Huayou in Zimbabwe announced the successful shipment of lithium sulfate over the weekend, which may ease some supply anxiety in the short term; however, disruptions from mine license renewals in Jiangxi persisted, Middle East geopolitical fluctuations pushed up diesel costs, and some Australian mines confirmed cost increases in their Q1 quarterly reports. Although actual mining has not been affected yet, medium and long-term supply elasticity may be impacted. Demand side, LFP capacity release and the peak season for new car model deliveries in Q2 are expected to continue boosting lithium carbonate demand. Overall, cost support and demand expectations are resonating, and lithium carbonate prices are expected to remain on a relatively strong trend in Q2. Lithium Hydroxide According to customs data, in March 2026, China imported 6,111 mt of lithium hydroxide, up 66% MoM and up 200% YoY. Of this, 2,927 mt came from Indonesia, accounting for approximately 48% of imports, with another 40% from Australia and South Korea. In March, China exported 3,143 mt of lithium hydroxide, up 20% MoM and down 26% YoY, of which 2,059 mt were exported to South Korea and 278 mt to Japan. Battery Materials Ternary Cathode Material In March 2026, China's ternary cathode material (NCM and NCA combined) exports reached 21,900 mt, up 103% MoM and up 163% YoY. Of this, NCM exports were 20,900 mt, accounting for 96%. In terms of export destinations, South Korea was the largest importer of NCM, with March imports of 8,500 mt; Poland, Malaysia, and Japan ranked second, third, and fourth at 3,720 mt, 2,409 mt, and 2,363 mt respectively. In addition, Germany's imports saw significant growth compared to the same period last year. China's ternary cathode material exports hit a record high in March, mainly driven by the cancellation of China's 13% VAT export rebate policy for ternary cathode material effective April 1. Four leading battery cell manufacturers in Japan and South Korea placed orders in advance, boosting demand not only for their domestic plants but also for their battery cell production sites in Southeast Asia and Europe. Beyond the rebate policy impact, EV subsidy policies in Europe also fueled strong demand growth, driving up China's ternary cathode material exports. Among them, the Nordic countries led in EV penetration rate thanks to the most generous subsidies; the UK, France, and Germany continued to serve as important sources of NEV sales support. In contrast, US NEV sales declined notably in Q1, down nearly 30% YoY, significantly impacting Q1 orders for some ex-China battery cell manufacturers targeting the North American market. Looking ahead to Q2, Europe is expected to remain the largest source of incremental ex-China ternary cathode material demand. Despite some disruption from the tax rebate policy, as more battery cell manufacturers and ternary cathode producers plan to complete construction and commence production this year and next, the outlook for European market demand remains optimistic. LiPF6 According to China Customs data, in March 2026, China's cumulative LiPF6 exports totaled approximately 4,554 mt, up approximately 161% MoM, while cumulative imports were approximately 31 mt. Export side, China's LiPF6 exports in March 2026 were approximately 4,554 mt, up approximately 161% MoM from February and up approximately 188.8% YoY. Specifically, as the VAT rebate policy for LiPF6 exports was officially canceled starting April 1, 2026, enterprises rushed to export in advance in March, driving MoM increases in exports to multiple major destination countries. Among them, exports to Poland were 1,723.602 mt (up approximately 693.63% MoM), South Korea 1,099.429 mt (up approximately 184.26% MoM), Czech Republic 460.5 mt (up approximately 237.36% MoM), and Malaysia 249.346 mt (up approximately 141.39% MoM). However, exports to the US declined — 266.146 mt (down approximately 53.70% MoM). Artificial Graphite In March 2026, China's artificial graphite imports were 673 mt, up 0.6% MoM and down 34.1% YoY. Average import price in March 2026 was 61,696 yuan/mt, up 3.9% MoM and up 10.6% YoY. Data source: China Customs, SMM In March 2026, China's artificial graphite exports were 37,525 mt, up 6% MoM and down 16% YoY. Average export price in March 2026 was 9,866 yuan/mt, up 14.4% MoM and down 7% YoY. Flake Graphite In March 2026, China's flake graphite imports were 3,905 mt, up 11% MoM and up 45% YoY. Data source: China Customs, SMM In March 2026, China's flake graphite exports were 8,118 mt, up 35% MoM and up 65% YoY. Phosphate Ore According to customs data, China's phosphate ore imports in March 2026 were 182,000 mt. March imports rose 88.2% from February's 97,000 mt, up 144.4% YoY from 75,000 mt; March total import value was $14.552 million, up 74.6% MoM from February's $8.336 million. Unit price was $79.9/mt, down 7.2% significantly from February's $86.1/mt. In March, China's phosphate ore imports mainly came from Egypt and Pakistan, with imports of 170,000 mt and 12,000 mt respectively. Affected by factors related to the Strait of Hormuz, Jordanian phosphate ore failed to be imported, though imports from other regions filled the gap. Due to hindered transportation of high-priced Jordanian phosphate ore and lack of import volume support, March phosphate ore import unit price declined from February, pulling back to below $80/mt. Cobalt Cobalt Hydrometallurgy Intermediate Products In March 2026, China's cobalt hydrometallurgy intermediate products imports were approximately 1,690 mt in physical content, down 26% MoM and down 97% YoY. Among them, imports from DRC were approximately 1,668 mt in physical content, up 10% MoM and down 97% YoY. In March 2026, the average import price of China's cobalt hydrometallurgy intermediate products was $16,730/mt in physical content, up 2.92% MoM. It was learned that cobalt intermediate products export volume from DRC increased notably in March. If the government maintains this efficient approval pace going forward, quotas for Q4 2025 and Q1/Q2 2026 will most likely be exported within the stipulated timeframe, reducing the probability of further delays. However, shipping in Africa is currently tight, with only a few miners completing small-batch vessel bookings in April. Based on a 1-2 month shipping time from South Africa to China, these intermediate products are expected to arrive at port in May-June, while intermediate products from other miners are not expected to arrive until around July. Unwrought Cobalt In March 2026, China's unwrought cobalt imports were approximately 961 mt, down 44% MoM and up 83% YoY. March imports remained at a relatively high level, mainly due to continued arrivals of export orders placed during the import window opening from late December 2025 to mid-January 2026. On average import price, China's unwrought cobalt average import price in March 2026 was $50,346/mt, up 10% MoM. Cumulative imports from January to March 2026 totaled 4,582 mt, up 206% YoY cumulatively. It was learned that as the import window gradually closed after mid-to-late January 2026, overseas traders' export willingness weakened, and refined cobalt imports in April may continue to decline MoM. Exports, China's unwrought cobalt exports in March 2026 were approximately 413 mt, up 32% MoM and down 69% YoY. By country, China's exports to the US rose slightly, with 280 mt exported to the US in March, up 13% MoM. Average export price, China's average export price of unwrought cobalt in March 2026 was $51,596/mt, down 3% MoM. Cumulative imports from January to March 2026 totaled 1,574 mt, down 52% YoY cumulatively.

This week, ternary cathode material prices edged higher. On the raw material front, nickel sulfate rose slightly, cobalt sulfate edged down, manganese sulfate held steady, while lithium carbonate and lithium hydroxide showed an upward trend amidst volatility. In terms of transactions, with raw material prices remaining at high levels and fluctuating, battery cell manufacturers currently have sufficient inventory levels and no urgent need for pick-ups . They are largely continuing to execute orders signed when raw material prices were lower, waiting for opportunities when prices may correct. Payable levels remained stable, with no significant changes in the past two weeks. On the demand side, the domestic EV market showed modest signs of recovery. Upcoming new model launches at this week's auto show are expected to provide some impetus to future demand . The consumer market, however, remained relatively subdued. Overseas orders have declined compared to March following the conclusion of the export rebate policy. With the May Day holiday approaching, some cathode manufacturers have restocking needs for raw materials, which is expected to provide support to raw material prices at the end of the month . However, downstream battery cell manufacturers still have limited acceptance of price increases . The specific price trend will still need to focus on manufacturers' restocking situations at the end of the month.

The domestic EV market showed modest signs of recovery. Upcoming auto shows next week may feature new model launches, which could provide some momentum for future demand.

Currently, the export of ternary precursors and ternary cathode materials enjoys a 13% VAT export rebate. A noticeable surge in concentrated "pre-rebate" exports is anticipated in the first quarter.

In December 2025, China's ternary precursor exports totaled 6,487 tons, marking a significant decline of 34% month-on-month and 49% year-on-year. South Korea maintained its position as China's primary export destination.

On January 13, 2026, the pCAM project at CNGR’s industrial base in South Kalimantan, Indonesia, officially commenced operation. Construction of the project began in February 2025, with the first batch of core production equipment arriving and being installed in July of the same year. The facility is now fully operational, with its annual production capacity set to be gradually ramped up to 20,000 tons. According to the "Announcement on Adjusting Export Tax Rebate Policies for Photovoltaic and Other Products" jointly issued earlier by the Ministry of Finance and the State Taxation Administration, starting from April 1, 2026, the 13% VAT export rebate on pCAM products will no longer be available. Following the implementation of this policy, the export cost of Chinese ternary precursor products is expected to rise significantly. This measure is likely to further accelerate the overseas capacity deployment of domestic precursor manufacturers, expedite the construction of overseas production bases, and promote the localization of the global ternary supply chain.

On January 9, 2026, China's Ministry of Finance and the State Taxation Administration announced that, from April 1, 2026, to December 31, 2026, the VAT export rebate rate for battery products would be reduced from 9% to 6%; starting January 1, 2027, the VAT export rebate for battery products would be abolished. The introduction of this policy appears to reduce export subsidies for the battery industry. However, at a deeper level, the policy implies multiple intentions behind industrial transformation. This article presents only a personal interpretation of the policy; readers should not take it as definitive guidance. Before formally analyzing the policy's intentions, we must first clarify in which segment the reduction in the rebate rate results in decreased earnings. I. Customer Self Pick-Up: Tax Burden Shifted to the Customer (This is the predominant method for battery exports) Under the self pick-up model, the export responsibilities of battery enterprises are relatively reduced, and the tax burden is shifted to the customer. However, although battery producers are not directly responsible for tax issues, this model still has significant impacts on both parties. 1) The Customer Bears the Tax Burden: For customers, the reduction in the VAT export rebate rate means they need to bear more tax costs. The rebate decreases from the original 9% to 6% (from April 1, 2026, to December 31, 2026), increasing the tax burden on enterprises, which directly leads to customers having to pay for these additional expenses. For customers reliant on Chinese battery suppliers, this change will directly increase the procurement costs of products, thereby affecting their overall profits. In the short term, this policy adjustment may stimulate a new round of export rush for Chinese batteries. a. Cost Increase Pressure: Particularly in overseas markets, customers may need to adjust product pricing to account for the increased tax costs or seek alternative suppliers to replace existing battery producers. For small and medium-sized customers, the increased costs may lead to reduced market competitiveness, especially in regions with intense price competition. b. Demand for Price Reduction: After customers bear the tax portion, they may request battery producers to lower product prices to offset the increased tax burden. As battery producers face their own cost increase pressures (including raw material and production costs, etc.), they may not compromise on pricing. If battery producers do make pricing concessions, they must seek other cost control measures while maintaining profitability. 2) Strategic Adjustments by Battery Enterprises: For battery enterprises, although they do not directly bear the tax issues, the customers' demands for price reductions and market pressures cannot be ignored. Battery producers may need to: a. Enhance product added value: While ensuring product quality, increase the technological content and added value of products to maintain competitiveness in the high-end market. For example, develop more efficient power batteries or ESS batteries, focusing on NEVs or large-scale ESS projects. b. Optimize supply chain management: To cope with customers' price reduction demands, battery producers need to further optimize supply chain management, reduce production costs, and increase R&D investment to enhance product competitiveness through technological innovation. 3) Market pressure and customer relationship management: Battery producers need to strengthen customer relationship management to ensure the provision of price-competitive products while maintaining long-term cooperative relationships with customers. By establishing stable supply chains and favorable long-term cooperation agreements, battery producers can reduce market uncertainty caused by short-term price fluctuations. II. Battery Producers Shipping Overseas Independently: Tax Pressure Directly Impacts Profits Compared to the customer self pick-up model, under the model where battery producers ship overseas independently, they bear higher tax costs as they are responsible not only for domestic VAT but also for handling tax issues during the export process. This means battery producers will face direct cost pressure, which may affect their profit margins and market pricing strategies. 1) Battery producers bear the tax burden: Under the model where battery producers ship overseas independently, producers must bear the increase in tax costs, which directly impacts their pricing strategies. With the tax rebate rate dropping from 9% to 6%, battery producers will pay more VAT, but these costs are not borne by customers. This change directly compresses producers' profit margins. a. Cost increase and price adjustments: Battery producers must consider how to pass on the additional tax burden to customers. With prices already near the global market floor, producers may find it difficult to address cost increases through simple price hikes. Therefore, producers must make greater efforts in production efficiency, technological innovation, and operational cost control. b. Tax complexity in international operations: For battery producers operating across borders, dealing with VAT and tariffs becomes more complex due to varying tax systems and policies in different countries. Tax compliance issues not only increase operational costs but may also cause delays and compliance risks in cross-border transactions, further affecting producers' market responsiveness. 2) Ongoing market competition pressure: Price competition among battery producers in the international market will intensify. Especially in the face of the price and technological advantages of top-tier enterprises, battery producers need to enhance their competitiveness in multiple aspects: a. Technological Innovation and High Value-Added Products: In addition to price adjustments, battery producers must increase the market appeal of their products through technological innovation. For example, improving battery energy density, charging speed, and lifespan, as well as developing more environmentally friendly battery technologies. b. Cost Optimization: Battery producers also need to optimize production processes, reduce resource waste, and lower production costs. By scaling up production and automating production lines to improve efficiency, they can alleviate cost pressure. Personal Interpretation: The "Capacity Reduction" and "Anti-Involution" Effects of Tax Cuts and Subsidies: Beyond short-term tax adjustments, the deeper goal of this policy shift is to address the issue of involution in the battery industry. China's battery sector, particularly in power batteries and ESS batteries, has experienced years of excessive competition. Low-price competition, technological imitation, and over-reliance on policy subsidies have made it difficult for many small and medium-sized enterprises to stand out, leading to a lack of technological innovation. In this context, the government aims to indirectly raise battery prices by lowering tax rebate rates, forcing the industry to reduce low-end capacity and shift toward higher-technology, higher value-added products. However, some industry insiders worry that excessive policy adjustments in the short term may exacerbate market instability, especially as the lithium battery industry's capacity still needs gradual digestion. Overly rapid capacity clearance could impose unbearable burdens on enterprises, further impacting the industry's healthy development. For the government, balancing the relationship between "capacity reduction" and "industry stability" to ensure healthy industrial growth will be a core challenge in future policy regulation. This goal of "capacity reduction" has precedents in other industries such as PV and chemicals, where involution is severe. Although such short-term "pain" is inevitably a prelude to long-term industrial structure optimization, for the battery industry, balancing short-term cost pressures with long-term strategic objectives will be key to a successful transformation. China's battery industry is currently in a phase of intense price competition and relatively small technological gaps. To capture market share, enterprises often resort to price cuts, and this involution has gradually affected the healthy development of the entire industry. By reducing fiscal support for low-end capacity, the government hopes that "natural selection" through market competition will eliminate enterprises lacking technological innovation and reliant on low-price strategies, thereby driving the industry toward high-quality, high-technology, and sustainable development. SMM Lithium Battery Analyst Yang Le +86 13916526348

The Ministry of Finance and the State Taxation Administration issued an announcement on adjusting the export tax rebate policy for PV and other products, with the following content: 1. Effective April 1, 2026, the VAT export tax rebate for PV and other products will be abolished. 2. From April 1, 2026, to December 31, 2026, the VAT export tax rebate rate for cell products will be reduced from 9% to 6%; starting January 1, 2027, the VAT export tax rebate for cell products will be abolished.