From S&P Global Commodities, May 17:
- Industrial activity in April paints a grim picture
- Challenges remain in May
- Shanghai's move to lift lockdowns a positive development
COVID-19 outbreak in 29 Chinese provinces and cities, in particular Shanghai and Changchun, had a greater impact on downstream demand for battery metals than raw materials supply in April.
China's demand for battery metals will continue to face challenges in May, as it might take some time for electric vehicle producers to resume production interrupted by COVID-19 resurgence, industry sources said.
Industries in Shanghai and Changchun, contributing about 20% of the nation's total vehicle production, faced huge supply disruptions due to rising coronavirus cases since end-March.
Shanghai recently rolled out plans to remove lockdowns in a phased manner from June.
Although production capacity of vehicles and auto part manufacturers in Shanghai and Changchun has been recovering following production restart from mid-April, it will still take time to achieve full production given the size of the automotive industry's supply chain, sources said.
Leading automobile and auto part manufacturers in Shanghai, including SAIC Motor Corp Ltd and Tesla Shanghai Gigafactory, have slowly resumed works. SAIC Motor has stepped up plans to resume operations and is expecting production to return to normal by the end of this month.
Market sources remain optimistic about China's EV sales in 2022, despite an increase in car prices and dampened demand from COVID-19 resurgence.
COVID-19 hits NEV industry in AprilChina's production and sales of EVs and power batteries fell sharply in April, posting double-digit declines because of COVID-19 lockdowns.
Several Chinese vehicle producers were forced to suspend or slow production in April as they faced shortages of auto parts, leading to a month-on-month decline in output.
New energy vehicles production dropped 33% month on month to 210,000 units in April, while sales fell 38.3% to 299,000 units over the same period, according to China Association of Automobile Manufacturers (CAAM).
April NEV production and sales volumes were still significantly higher year on year even as the numbers were dismal on a monthly basis, mirroring the expansive growth in China's EV industry in recent years.
LithiumChina's prices of lithium salts -- a key component of lithium-ion batteries -- have been under pressure in recent weeks because of increasing production from salt lakes, weak downstream demand due to the pandemic, and Chinese government's appeal to bring raw material prices down to "rational levels".
Battery-grade lithium carbonate prices fell for the first time on March 17 this year to Yuan 507,000/mt, after rising consistently from Yuan 60,000/mt in January 2021, according to the Platts assessment from S&P Global Commodity Insights.
The market expects lithium prices to rebound in second-half 2022, as vehicle producers may ramp up production to reach their year-end targets.
China's lockdown measures had limited effect on lithium salts production, with major lithium converters in regions, such as the Jiangxi, Sichuan, and Qinghai provinces, mostly unaffected by COVID-19 outbreak.
The country's cathode materials producers are expected to see an output cut of nearly 15% in April and some might even see a drop of about 40%, according to Antaike, the research arm of China Nonferrous Metals Industry Association.
China's lithium carbonate imports and hydroxide exports might decline in April, due to lockdowns in Shanghai -- a major lithium salts importing and exporting port.
"I honestly don't think they would reopen until the whole city has zero cases," said a Chinese precursor maker, estimating lockdowns to lift around end-May or early June.
Cobalt...
....MUCH MORE
