Pick up in China's NEV market has little impact on demand for battery metals

Singapore — China's new energy vehicle and battery output both saw a month-on-month increase in May, but had little impact on the unsteady battery metals market at least in the short-term, market sources said as prices for these metals continued to trend downwards.

The domestic battery metals market continued to face pressure due to a supply glut, despite expectation that increasing demand for lithium iron phosphate or LFP batteries will lend some support to lithium carbonate prices.

China's new energy vehicle output increased by 3.5% month on month to 84,000 units in May despite of a year-on-year decline of 25.8%, as vehicle producers resumed production on loosening of lockdown measures, while the stimulus policies released by central and local governments boosted consumption, according to the latest report released by China Association of Automobile Manufacturers (CAAM) June 11.

Meanwhile, S&P Global Platts assessed battery grade lithium carbonate down Yuan 500/mt to Yuan 41,500/mt ($5,871/mt) on June 5, while lithium hydroxide also lost Yuan 500/mt to Yuan 51,000/mt. Both assessments are on a delivered, duty paid China basis.

The lithium carbonate assessment has now lost Yuan 4,300/mt over the past seven consecutive weeks while hydroxide lost Yuan 2,000 during the same period.

NEV SALES, BATTERY OUTPUT PICK UP

The NEV sales reached 82,000 units in May, up 12.2% from a month earlier, but down 23.5%, year on year.

The total output and sales amounted to 295,000 units and 289,000 units respectively, in the first five months of this year, down 39.7% and 38.7% compared to the same period last year.

Meanwhile, China's power battery output hit 5.2 GWh in May, up 9.9% month on month, but down 47.7% from a year earlier.

Output of ternary batteries increased by 7.2% month on month, but fell 59.1% on year to comprise 3.1 GWh of the total, while that of lithium iron phosphate or LFP batteries increased by 13.8% month on month but dropped by 9.6% year on year to comprise the balance 2.1 GWh.

The output of LFP batteries accounted for 40.5% of the total in May, compared to the proportion of 23.4% in the same period last year.

The total power battery output during January-May reached 18.2 GWh, down 50.9% compared to the same period last year.