Copper Cathode
In October, SMM China's copper cathode production decreased by 8,600 mt MoM, a decline of 0.86%, but increased by 0.19% YoY, and exceeded expectations by 2,200 mt. The cumulative production from January to October increased by 480,100 mt YoY, a rise of 5.06%. Although new smelters were commissioned in October, the production ramp-up was slower than expected due to tight raw material supply. Additionally, five smelters underwent maintenance, leading to a MoM decline in October's production. However, the decline was less than expected, mainly due to the recent ample supply of blister copper and copper anode (the implementation of the Fair Competition Review Regulations was delayed, increasing copper scrap supply). The processing fee for copper anode plates rebounded in October, reaching 550 yuan/mt as of November 1, up 150 yuan/mt from the previous month. Furthermore, the operating rate of smelters using non-copper concentrates (using copper scrap or anode plates instead) was 64.2%, up 1.5 percentage points MoM, as per SMM statistics.
In summary, the sample operating rate of the copper cathode industry in October was 81.18%, down 1.41 percentage points MoM. Among them, the operating rate of large smelters was 83.63%, down 1.1 percentage points MoM; medium-sized smelters' operating rate was 77.08%, down 3.52 percentage points MoM; and small smelters' operating rate was 68.84%, up 1.06 percentage points MoM. The operating rate of smelters using copper concentrates was 84.7%, down 1.3 percentage points MoM, while the operating rate of smelters using non-copper concentrates (using copper scrap or anode plates instead) was 64.2%, up 1.5 percentage points MoM.
Entering November, SMM statistics show that seven smelters will undergo maintenance, involving a rough smelting capacity of 1.99 million mt, a significant increase from the 1.04 million mt capacity involved in October. Concentrated maintenance of smelters is the main reason for the production decline in November. Additionally, the tight supply of copper concentrates (as of November 1, the imported copper concentrates index was $11.09/mt, still at a historical low) has slowed the production ramp-up of some newly commissioned smelters, contributing to the production decline in November.
Based on the production schedule of various smelters, SMM expects domestic copper cathode production in November to decrease by 14,800 mt MoM, a decline of 1.49%, but increase by 20,100 mt YoY, a rise of 2.09%. The cumulative production from January to November is expected to increase by 500,200 mt YoY, a rise of 4.79%. The sample operating rate of the copper cathode industry in November is expected to be 79.72%, down 1.47 percentage points MoM. Among them, the operating rate of large smelters is expected to be 82.94%, down 0.69 percentage points MoM; medium-sized smelters' operating rate is expected to be 72%, down 5.08 percentage points MoM; and small smelters' operating rate is expected to be 71.02%, up 2.18 percentage points MoM. The operating rate of smelters using copper concentrates is expected to be 82.80%, down 1.9 percentage points MoM, while the operating rate of smelters using non-copper concentrates (using copper scrap or anode plates instead) is expected to be 64.90%, up 0.7 percentage points MoM, with the increase in copper scrap supply leading to a continuous rise in this operating rate for two consecutive months. Finally, the number of smelters planning maintenance in December will significantly decrease, and production is expected to rise again. SMM expects the total production in 2024 to reach 11.9389 million mt, an increase of 498,800 mt YoY, a rise of 4.36%.
Aluminum
According to SMM statistics, domestic aluminum production in October 2024 (31 days) increased by 1.69% YoY. Early in October, the capacity resumed from technical renovations gradually started producing, but the resumption of some smelters did not meet expectations, and full resumption might be delayed. Driven by the September-October peak season, the demand for downstream alloy products remained stable with a slight increase. In October, the proportion of liquid aluminum continued to rise by 0.2 percentage points MoM and increased by 3.6 percentage points YoY to around 73.93%. Based on SMM data on the proportion of liquid aluminum, the casting ingot production of domestic aluminum in October decreased by 9.23% YoY to around 965,300 mt.
Capacity changes: By the end of October, SMM statistics showed that the existing capacity of domestic aluminum was about 45.56 million mt, and the operating capacity was about 43.62 million mt, with the industry's operating rate up 0.64 percentage points YoY to 95.74%. The resumption of capacities from technical renovations in Sichuan and Guizhou and the new capacities in Xinjiang contributed to the operating capacity in October. Additionally, a replacement project in Inner Mongolia is also progressing steadily.
Production forecast: Entering November 2024, the resumption and ramp-up of new capacities are expected to further increase domestic aluminum operating capacity. However, due to the technical renovation and shutdown of an aluminum smelter in Henan, which is expected to affect 70,000-80,000 mt/year capacity, the overall increase in operating capacity in November is limited. SMM forecasts that by the end of November, the annualized operating capacity of domestic aluminum will reach 43.77 million mt/year. As November gradually transitions into the off-season, coupled with aluminum prices fluctuating at highs, some end-use sectors may adopt a wait-and-see approach, negatively impacting the demand for alloy products such as aluminum billets. It is expected that the proportion of liquid aluminum in October will adjust back to around 73%. Continued attention is needed on the resumption of aluminum production in various regions and the operating rate of downstream sectors such as aluminum billets.
Alumina
According to SMM data, China's metallurgical-grade alumina production in October 2024 (31 days) increased by 2.93% MoM and was up 6.51% YoY. As of November 7, China's existing capacity for metallurgical-grade alumina increased by 1.1 million mt MoM, with the actual operating capacity up 2.93% MoM, and the operating rate at 84.22%. From January to October 2024, the cumulative production of domestic metallurgical-grade alumina was up 3.96% YoY.
By region: In mid-to-late October, heavy pollution weather warnings were issued successively in north China, affecting the roasting process of some alumina refineries. Additionally, some companies experienced reduced roasting due to equipment failures, impacting short-term operating capacity. In Chongqing, an alumina refinery conducted phased maintenance at the end of the month, affecting October's operating capacity. In Shandong, a new alumina capacity is still ramping up and has not yet contributed to October's metallurgical-grade alumina production. Furthermore, according to the SMM survey, some alumina refineries are accelerating production considering their long-term contract execution.
Forecast for November: Entering November, some new capacities may finish ramping up and start shipping. Combined with the recovery of capacities previously affected by environmental protection and equipment maintenance, the operating capacity of domestic metallurgical-grade alumina is expected to rise again in November, potentially reaching 87.32 million mt/year. On the raw material side, there is no further news on the resumption of domestic ore production, and supply remains tight. Imported ore supply is at a low level due to the rainy season in Guinea, indicating an overall tight supply of bauxite, which continues to limit the increase in alumina operating capacity. SMM expects that the daily average production of China's metallurgical-grade alumina in November 2024 will increase by 1.77% MoM. Continuous attention is needed on the pace of new and resumed alumina capacity releases.
Overseas Aluminum
According to SMM statistics, in October 2024 (31 days), overseas aluminum total production was up 0.1% YoY, with cumulative production up 1.1% YoY. The average operating rate was 87.8%, down 0.5% MoM, up 0.1% YoY, maintaining overall stable production. New Zealand's Tiwai Point smelter reduced production by 125,000 mt in July and August due to power rationing but ended the cuts by the end of September and is expected to return to normal production levels by February 2025. Meanwhile, Press Metal's plant in Samalaju experienced an explosion in September, affecting about 9% of its total aluminum capacity, involving 100 out of 300 electrolytic cells in Phase III, and is expected to reduce Press Metal's 2024 annual aluminum production by about 3%. The damaged facilities are expected to take approximately four months to repair, after which production will gradually resume.
Additionally, other resumption progress is as follows: South America's Alumar aluminum smelter (60% owned by Alcoa, 40% by South32) announced resumption in April 2022, with the operating rate recovering to about 72% in October, and the remaining capacity to be resumed is about 125,000 mt. Russia's Taishet aluminum smelter has seen slow progress since the resumption announcement in 2022, with the operating rate recovering to about 67% in October, and the remaining capacity to be resumed is 145,000 mt. Europe's Trimet announced the resumption of its three aluminum smelters in Germany in April this year, expected to reach full production by mid-2025, with the operating rate recovering to about 66% in October, and the remaining capacity to be resumed is 277,000 mt. In terms of new capacity, the second phase of the Hua Chin aluminum smelter in Indonesia, with an expansion capacity of 250,000 mt, started production this month and is expected to reach full production by year-end or early next year, with a total capacity of 500,000 mt. Additionally, no overseas aluminum smelters reduced production in October due to high alumina costs.
Looking ahead to November, SMM expects overseas aluminum production in November 2024 (30 days) to increase slightly by 0.3% YoY, with the average operating rate reaching 88%, up 0.2% MoM, and up 0.4% YoY.
Overseas Metallurgical Grade Alumina
According to SMM statistics, in October 2024 (31 days), overseas metallurgical grade alumina production decreased by 1.3% YoY, and cumulative production from January to October decreased by 0.1% YoY. The average operating rate of overseas alumina refineries was 79.9%, up 1% MoM but down 4% YoY. In its Q3 report, Rio Tinto noted that the QAL and Yarwun alumina refineries in the Gladstone region of Australia have gradually recovered from the impact of the natural gas pipeline explosion. In October, QAL's operating rate has recovered to about 94%, mainly relying on energy support from its own thermal power plant, while Yarwun has recovered to about 78%. Rio Tinto expects both refineries to return to normal production levels by year-end.
In India, Vedanta's Lanjigarh alumina refinery saw a decline in production due to insufficient bauxite supply, with the current operating capacity at 2 million mt. Vedanta expects that after the Sijimali bauxite mine in India starts production next year, Lanjigarh's total capacity is expected to increase to 3.5 million mt, with a long-term goal of reaching 5 million mt.
Looking ahead to November, overseas metallurgical grade alumina production is expected to decrease by 1% YoY, with an average operating rate of about 79.6%. The reasons for the decline include: first, Guinea suspended GAC's bauxite exports in early October, and both parties are still negotiating to resolve the issue, which may lead to reduced production at EGA's Al Tawalwh alumina refinery. Additionally, due to a long-term supply contract of about 3 million mt between EGA and Vedanta, the ban may also affect Vedanta's alumina refinery production. Second, in early November, Alcoa's Juruti bauxite mine in Brazil suspended ore shipments due to a grounded transport ship, which may lead to reduced production at Alcoa's two alumina refineries in Brazil due to insufficient raw material supply. However, the specific impact remains to be seen, and SMM will continue to monitor the situation.
Primary Lead
In October 2024, national primary lead production increased significantly, up 8.84% MoM, but down 1.34% YoY. From January to October 2024, cumulative primary lead production decreased by 4.17% YoY. The total capacity of the surveyed enterprises in 2024 is 6.0063 million mt.
According to SMM survey, primary lead smelters resumed production as scheduled in October after maintenance, resulting in a substantial increase in production, fully recovering from September. Specifically, smelters in Henan, Hunan, Inner Mongolia, and Guangxi resumed production after maintenance, with most being medium to large enterprises, leading to significant production increases. Additionally, new capacity in Qinghai lead smelters was commissioned as planned, contributing entirely new production. Under the influence of these two factors, October primary lead production reached its highest level of the year.
Looking ahead to November, primary lead smelters are expected to maintain stable production. Among the enterprises with production changes, some smelters in Hunan and Henan will continue to recover after completing maintenance in October, reaching normal production levels for the entire month. Meanwhile, smelters in Guangdong and Jiangxi will undergo minor maintenance, expected to last around 10 days. SMM forecasts that November primary lead production will remain flat compared to October.
Secondary Lead
In October 2024, the production of secondary crude lead increased slightly, up 3.05% MoM, but down 34.97% YoY. The production of secondary refined lead increased 3.78% MoM, but decreased 37.53% YoY. In early October, smelters in Hunan and Guangxi halted production for maintenance. In mid-October, several cities in Hebei province initiated a level II emergency response to heavy pollution weather, causing some local smelters to stop production. Smelters in Henan were also affected by environmental protection-related controls due to weather pollution. In late October, some large smelters in Anhui province halted production for maintenance. Meanwhile, medium and large secondary lead smelters that resumed production in September and ramped up production in October contributed significantly to the increase, such as Inner Mongolia Taiding, Shanxi Yichen Environmental Protection Technology Co., Ltd., Anhui Lukong Environmental Protection Co., Ltd., and Camel Group (Anhui) Renewable Resources Co., Ltd. Overall, the production of secondary lead increased slightly by about 10,000 mt in October.
Entering November, as the weather in the north gets colder and heating starts, heavy pollution weather is expected to occur frequently, and environmental protection-related controls may continue to affect secondary lead production. Coupled with fluctuating lead prices, tight raw material supply, and relatively high prices, some smelters expect production cuts in November. According to SMM statistics, the production of secondary refined lead in November may remain stable or decrease slightly.
Refined Zinc
In October 2024, SMM reported that China's refined zinc production increased by nearly 10,000 mt or approximately 2% MoM, but decreased by more than 15% YoY, exceeding expectations. Among these, domestic zinc alloy production in October increased by over 1,000 mt MoM. Entering October, domestic smelters increased production, mainly due to production ramp-ups and recoveries from maintenance in smelters located in Hunan, Shaanxi, Henan, and Inner Mongolia, while routine maintenance in Gansu and production cuts in Sichuan caused some reductions. Overall, production continued to rise.
SMM expects that in November 2024, domestic refined zinc production will be nearly 500,000 mt, down by over 10,000 mt or approximately 2.5% MoM, with a cumulative YoY decline of over 6%. Overall, smelter production in November is expected to decrease, with reductions mainly concentrated in smelters in Inner Mongolia, Gansu, Henan, and Sichuan due to maintenance and production cuts. Meanwhile, increases are mainly concentrated in Inner Mongolia, Shaanxi, Gansu, Hunan, and Yunnan.
Refined Tin
According to the latest assessment by SMM, in October 2024, China's refined tin production showed a significant recovery trend. After experiencing a sharp decline in production in September due to raw material shortages and shutdowns for maintenance at some smelters, the overall production of tin ingots in October has shown a clear upward trend with the resumption of operations at some smelters.
In Yunnan, although the quantity of tin ore imported from Myanmar remained low, the import volume in October increased compared to September, which alleviated the raw material pressure in the region to some extent. Additionally, with some smelters ending their shutdowns for maintenance and resuming normal operations in October, a solid foundation was laid for the recovery of production in Yunnan.
Meanwhile, smelters in Jiangxi actively sought solutions to the challenges of raw material supply, such as expanding the procurement channels for tin scrap, to ensure the stability of current production. In Inner Mongolia and Guangxi, the production activities of smelters continued to remain stable. However, in Anhui and other regions, the increased difficulty in obtaining raw materials has affected the production of smelters to some extent, and it is expected that their subsequent production may face challenges in maintaining current levels.
Considering all the above factors, we forecast that in November, the national production of tin ingots may see a slight decline. Given the uncertainty in the import situation of tin ore from Wa State in Myanmar and the increasingly prominent raw material supply issues for smelters, all market participants need to remain highly vigilant and closely monitor the latest developments in the raw material market to respond promptly to potential market fluctuations.
Refined Nickel
In October 2024, the national production of refined nickel decreased by 2.6% MoM but increased by 27.78% YoY, with cumulative production up 37.84% YoY. The monthly operating rate was 71.18%, down from the previous month. The decline in national refined nickel production in October was mainly due to the National Day holiday, which led to a decrease in the operating rate of some small factories. On the other hand, in October, the weak fundamentals continued to put pressure on nickel prices, causing nickel prices to fluctuate downward. As a result, overall production decreased compared to the previous month. In November, the US election is expected to increase political uncertainty, coupled with ongoing disturbances in the nickel ore sector, market sentiment may drive nickel prices upward. Additionally, the number of production days in the month is more than in October. Therefore, it is expected that in November 2024, the national production of refined nickel will increase by 1.79% MoM, up 35.37% YoY, with cumulative production up 37.59% YoY.
NPI
In October 2024, the national NPI production increased by approximately 8.11% MoM in physical content and by approximately 4.16% MoM in metal content. Both physical content and metal content of national NPI rose in October. The spot prices of domestic high-grade NPI fluctuated upward, enhancing the production enthusiasm of smelters, leading to higher output. Additionally, the demand for high-grade NPI from domestic steel mills increased, prompting domestic high-grade NPI smelters to improve the grade to meet market demand, which in turn drove the metal content up MoM. Furthermore, from the perspective of integrated stainless steel mills, although the economic advantage of self-produced high-grade NPI has somewhat recovered, steel mills still primarily purchase externally in the short term, resulting in a slight decline in self-produced high-grade NPI. Moreover, the increased production of 200-series stainless steel mills led to a rise in low-grade NPI production, reflecting an overall expansion in physical content MoM in October.
In November 2024, the national NPI production is expected to increase by approximately 2% MoM in physical content and by approximately 1.25% MoM in metal content. According to the SMM survey, the resumption of production after maintenance at smelters in North China will bring an increase in the supply of high-grade NPI. Meanwhile, the production of 200-series stainless steel is expected to continue increasing, with a corresponding slight rise in low-grade NPI production. However, the decline in high-grade NPI prices in November is expected to weaken the production drive of smelters, resulting in a limited overall increase in production for November.
Indonesian NPI
In October 2024, Indonesian NPI production continued to rise, up 7.53% MoM and up 13.5% YoY. The cumulative production for 2024 rose by 7.3% YoY. In terms of supply, the long-awaited RKAB quota for October finally materialized in the market. Apart from a small portion allocated to medium-sized mines near Sulawesi and Halmahera Islands, the majority of the quota was concentrated on WBN. Although the cumulative RKAB quota approved for WBN this year was somewhat lower than expected, the market's expectation of circulating supply. The supply of nickel ore from Halmahera Island saw a significant increase in Q4, reducing the pressure of cross-island external purchases, which to some extent supported the upward trend in Indonesian NPI production for the month. On the other hand, due to the strong intention to stand firm on quotes for high-grade NPI in China's market and the recovery of downstream profits, the price of Indonesian NPI also had some room for a slight increase. Additionally, due to fluctuations in nickel prices in the futures market during the month, the overall transaction volume in the high-grade nickel matte market was sluggish, weakening the drive for converting to nickel matte production. This provided some room for an increase in NPI production from lines that had switched to nickel matte production. With some new production lines expected to come online gradually within the year, Indonesian NPI production in November is expected to rise 2.13% MoM and 5.3% YoY, with cumulative production up 7.1% YoY.
Nickel Sulphate
In October 2024, the national production of nickel sulphate was 28,700 mt in metal content, and 130,600 mt in physical content, down 11% MoM and 24.49% YoY. In October, demand side, the production schedule of leading ternary cathode precursors increased due to the September-October peak season. However, some integrated enterprises reduced their self-produced nickel salt output due to inventory adjustments and active destocking, and slowed down the pace of procurement from nickel salt smelters. Supply side, nickel salt smelters reduced production due to the impact of downstream enterprises, leading to lower nickel salt output.
In November, with the introduction of macro policies, nickel prices fluctuated at high levels, and nickel salt smelters had a strong sentiment to stand firm on quotes. Additionally, downstream precursor plants increased their demand for nickel salt after adjusting their inventories, prompting nickel salt smelters to increase their production schedule. Currently, it is estimated that the national in metal content, and 133,300 mt in physical content, up 2.09% MoM and down 17.3% YoY.
High-purity Manganese Sulphate
In October 2024, China's production of high-purity manganese sulphate declined both MoM and YoY. In terms of supply, due to environmental protection inspections in Guangxi, a major production area for high-purity manganese sulphate, some enterprises temporarily halted production, leading to a significant reduction in market supply. On the demand side, the demand from downstream ternary cathode precursor enterprises decreased, with most companies only maintaining long-term contract execution and minimal spot purchases, resulting in a sluggish market inquiry. Affected by the dual impact of reduced supply and weak demand, most enterprises chose to cut production to avoid the risk of supply surplus and inventory buildup. It is expected that by November, some temporarily halted enterprises may resume normal production, and market supply is likely to return to previous levels. Overall, it is anticipated that China's production of high-purity manganese sulphate will slightly rebound in November, but the increase will be limited.
Electrolytic Manganese Dioxide (EMD)
In October 2024, China's EMD production saw a slight increase compared to the previous month and the same period last year. The ideal demand in the primary battery market prompted companies to actively boost the production of carbon-zinc and alkaline-manganese EMD, significantly increasing market supply. Although the secondary battery market also experienced some recovery, the significantly higher price of EMD compared to Mn3O4 led to low interest in producing lithium-manganese EMD, resulting in little change in the production. By November, the primary battery market is expected to stabilize, and the secondary battery market will enter the off-season, potentially leading to a decline in demand and a further slight decrease in EMD production. Overall, EMD production in November is expected to slightly decline.
Mn3O4
In October 2024, China's production of Mn3O4 increased both MoM and YoY, with a particularly noticeable increase in battery-grade Mn3O4. This trend is mainly attributed to a slight recovery in the LMO market. Mn3O4, with its cost advantages, has expanded its market share in the LMO raw material market, prompting related companies to adjust their production plans and increase output. By November, the LMO market is expected to stabilize, and the production growth of battery-grade Mn3O4 may stagnate, while the electronic-grade market still faces an oversupply issue, making improvement difficult. Overall, China's Mn3O4 production in November is expected to decrease slightly MoM.
High-carbon Ferrochrome
According to SMM data, the national production of high-carbon ferrochrome slightly decreased in October 2024. In October, the peak season for stainless steel consumption did not meet expectations, leading to an inventory backlog of chrome raw materials at stainless steel mills. Major stainless steel producers significantly reduced their bidding prices for high-carbon ferrochrome. With the substantial compression of high-carbon ferrochrome prices, losses occurred, prompting many small and medium-sized ferrochrome plants to increase production cuts and maintenance. However, large ferrochrome plants experienced relatively limited losses. Due to high costs of shutdowns and the pressure of annual electricity agreements, the reduction in their production was relatively small. Overall, ferrochrome production saw only a slight decline.
National production of high-carbon ferrochrome in November is expected to further decrease compared to October. The procurement prices for high-carbon ferrochrome by stainless steel plants continued to decline in November, while the low-cost chrome ore had not yet arrived at ports, exacerbating the losses for ferrochrome producers. Previously, the market was oversupplied, and with the off-season approaching year-end, the market held a pessimistic outlook for future performance, reducing production enthusiasm. Many producers that had previously halted production have no plans to resume within this year. The Sichuan region has entered the dry season, increasing electricity costs, leading most producers in the area to choose to halt or reduce production. Additionally, other regions also had significant production cut plans in mid-October. Therefore, production is expected to further decrease in November.
Stainless Steel
According to the SMM survey, the total stainless steel production in China in October 2024 increased by about 2% MoM and decreased by about 0.64% YoY, and cumulative production increased by about 3% YoY. Among them, the production of 200-series stainless steel increased by about 9% MoM, 300-series increased by about 2% MoM, and 400-series decreased by about 9% MoM.
After the National Day holiday in October, favorable macro policies led to a collective rise in the metals sector. Stainless steel prices surged significantly, boosted by nickel products and the real estate ferrous metals series. Market sentiment also drove active trading and purchasing, leading to several weeks of recovery in the stainless steel market, with profits for stainless steel mills improving. Stainless steel mills in south China that had reduced production for maintenance in September showed signs of resuming production in October. Additionally, new capacity in north China gradually ramped up as orders increased in markets such as Hebei and Henan, resulting in a significant increase in 200-series production in October. For the 300-series, although finished product prices rose, high NPI prices after the holiday continued to result in losses. Some integrated stainless steel mills and EAF steel mills with a high proportion of scrap in raw materials increased production, while other small and medium-sized private mills began to reduce production. For the 400-series, the cumulative production this year has increased by about 15% YoY, but the demand growth has not kept pace with production growth, leading to a significant surplus. The lack of motivation for price increases in 400-series products resulted in poor profits. Consequently, a 400-series stainless steel mill in east China ceased production and switched to other products in October, while other mills maintained stable production, leading to a significant reduction in 400-series stainless steel production in October.
Entering November, as macro factors dissipate, futures and spot prices return to fundamentals. With NPI prices remaining firm, the profits for 200 and 300-series stainless steel have once again reached the margin, with some stainless steel mills experiencing deeper losses than in September. Additionally, in November, some stainless steel mills in south China faced power outages and fewer production days, leading to a slight decline in the production schedule for the 300-series. For the 400-series, chrome ore prices and high-carbon ferrochrome bidding and retail prices have dropped significantly, while 400-series prices stabilised; therefore, profits restored. Some mills plan to switch 300-series capacity to 400-series, with a slight increase in 400-series production expected.
EMM
According to SMM data, China's EMM production in October 2024 decreased by about 3% MoM but increased by about 0.2% YoY, with cumulative production up 11.6% YoY. The MoM decline in October production was mainly due to the planned shutdown of some smelters in Guizhou, affecting production by several thousand mt, while the operating rates and production in other regions such as Guangxi remained relatively stable or showed minor fluctuations. EMM prices in October rebounded compared to September, driven by improved downstream demand and rising bidding prices under favorable domestic policies, coupled with a simultaneous increase in overseas demand after the summer break. Therefore, some manganese plants plan to resume production in November, with an expected production increase of about 5% MoM, mainly in regions such as Guangxi and Guizhou. However, EMM transactions in November are under pressure, spot prices decline, and some manganese plants experience losses in retail transactions. It is expected that the resumption of production at smelters will be delayed or the number of production lines restored will be lower than expected.
SiMn Alloy
According to SMM data, China's total SiMn alloy production in October 2024 increased by approximately 4% MoM but decreased by over 30% YoY. From January to October 2024, China's cumulative SiMn alloy production decreased by over 10% YoY. The main reason for the production increase in October is the resumption of production in both northern and southern SiMn alloy plants. Specifically, Inner Mongolia maintained a high operating rate, with some reductions due to maintenance having been restored. Additionally, due to the alleviation of production pressure, the overall production of SiMn alloy plants in Inner Mongolia saw a slight increase. Stimulated by favourable macro news, SiMn alloy plants in regions such as Guangxi and Guizhou also resumed production. Overall, the total national SiMn alloy production in October showed an increase.
Entering November, SiMn alloy plants in cost-advantaged regions like Inner Mongolia are expected to maintain their operating rates. However, SiMn plants in Yunnan and other regions are entering the rainy season, leading to rising electricity prices and significant production pressure, with plans for production cuts or suspensions. Additionally, the firm manganese ore prices at southern ports drive up costs, making a significant increase in the operating rate of SiMn alloy plants unlikely. Therefore, the overall SiMn alloy production in November is expected to decrease.
Silicon Metal
According to SMM statistics, China's silicon metal production in October increased by 15,700 mt MoM, up 3.5% MoM, and by 77,300 mt MoM, up 19.7% YoY. From January to October 2024, production reached 4.1625 million mt, up 1.115 million mt, up 36.6% YoY.
In October, most production areas saw an increase in silicon metal production MoM. In terms of supply increments, Gansu and Xinjiang had the largest increases, at 6,700 mt and 8,500 mt, respectively. Additionally, Inner Mongolia and Ningxia also experienced slight production increases. The main reasons were the ramp-up of new capacity or the resumption of previously halted capacity due to maintenance. The supply reduction was mainly seen in Yunnan, where a small amount of capacity saw production reduced or halted within the month.
In November, Sichuan and Yunnan officially enter the dry season, and local silicon companies have significantly reduced production by the end of October. The production in these two regions is expected to decrease sharply in November. Silicon companies in north China are expected to maintain normal production plans, with some new capacity contributing to the increase. In November, silicon metal supply is expected to show a strong trend in the north and weak in the south. Overall, national production in November is expected to decrease to around 400,000-410,000 mt MoM.
Polysilicon
In October, the actual domestic production of polysilicon increased slightly by about 1% MoM from September, with the increase very limited. The main growth came from a slight increase in granular polysilicon production and the trial production of new capacity by Tongwei. In November, due to production cuts in Sichuan and Yunnan, domestic polysilicon production is expected to decline significantly by 8.6%. Additionally, a base in Inner Mongolia will also slightly reduce production.
PV Module
According to SMM statistics, China's PV module production in October increased compared to September. Entering Q4, the peak delivery period for procurement projects and the final rush to meet year-end shipment targets, various module manufacturers increased their operating rates to meet order demands and strive to achieve shipment goals. The operating rate of the top 10 module companies rose to 60%-70%, and the market concentration of modules increased to 78%. Specifically, some saw increases while others saw decreases. The main reason for the increase was the concentrated delivery of orders from downstream customers, while the decrease was due to the unsustainable low-price order-grabbing strategy, exacerbated losses, and weak demand, forcing companies to reduce their operating rates.
Entering November, China's PV module production is expected to slightly decrease MoM, mainly due to reduced production schedules at overseas bases of Chinese companies, while their production schedules within China are expected to remain flat MoM. By technology route, the production schedule of BC modules is expected to increase steadily, PERC modules are gradually exiting the market with a share of less than 5%, N-type TOPCon modules continue to dominate the mainstream market, and the production schedule of HJT modules is expected to increase due to rising year-end domestic delivery demand and overseas orders. At the end of October, there were calls in the module market to reduce production and raise prices, but companies' year-end production and shipment strategies were difficult to unify. Some companies chose to significantly increase production to achieve the final target, while others, due to poor sales and the inability to bear the pressure of losses, chose to continue reducing their operating rates. Year-end delivery demand remains at a peak, supporting the overall production schedule, with a narrow decline.
Solar Cell
In October, the operating rate of Chinese cell enterprises was 55.10%, with total production down 4.28% MoM. The operating rate of Chinese cell enterprises within China was 57.27% in October, and BC cell production saw a significant increase. In November, the operating rate of Chinese cell enterprises is expected to be 58.92%, with the total planned production up 6.93% MoM. November marked a small peak in monthly cell demand for the year, with specialized cell manufacturers undergoing significant destocking in October and November, boosting the confidence of cell enterprises. However, the increase in the operating rate in November and December is expected to be limited, with the total supply of cells being more influenced by the operating rate of integrated manufacturers. Looking ahead to December, the operating rate of specialized cell manufacturers is expected to remain stable, while the operating rate of integrated cell manufacturers is expected to decline.
PV Film
According to SMM statistics, China's PV film production in November is expected to decrease by 1.4% MoM compared to October. At the enterprise level, some companies saw an increase in production, while others experienced a decrease. The decrease in production was mainly due to the rising prices of EVA and POE, which exacerbated losses on film production, leading some manufacturers to reduce orders to ensure stable cash flow. The increase in production occurred because film manufacturers with reduced production schedules transferred orders to other suppliers of their customers. Additionally, the overseas market for PV film production showed a stable upward trend. Malaysia's film production schedule increased by 20.8% MoM, while Vietnam and Thailand remained unchanged from October.
PV EVA
PV EVA production in November is expected to decrease by 15.38% MoM. At the company level, some companies will see an increase in production, while others will see a decrease. The decrease is mainly due to expected equipment maintenance and a shift in production to LDPE. Currently, LDPE prices remain high, and the switching process requires some time, so a switch in production is not expected in the near term. The increase in production is mainly due to PV EVA prices exceeding those of cable and foam EVA, enhancing the willingness to increase PV EVA production schedules. Overall, the decrease in production outweighs the increase, leading to a decline in total supply. On the import side, PV EVA imports are expected to recover compared to October, but due to the expected decline in module scheduled production in December, long-term demand is not optimistic. Additionally, current overseas market prices are relatively high, so the willingness to take orders may not meet expectations. The supply in November remains relatively tight.
PV Glass
In October, the monthly production of domestic PV glass continued to decrease, down 11.52% MoM from September. The operating rate of domestic PV glass producers further declined in October, but the reduction was less significant compared to previous periods. The number of companies reducing production and performing cold repairs decreased, with a 2,450 mt/day furnace undergoing cold repair in October. However, due to fewer production days in November, it is expected that glass production will still have room to decline in November.
DMC
In October, the domestic production of silicone DMC decreased by 19.98% MoM. In October, the operating rate of monomer producers varied. Major monomer producers in east China underwent full-scale maintenance, while another monomer producer's new capacity started ramping up production. Additionally, in late October, monomer capacity in Hebei also resumed production. The operating rates of monomer producers were mixed, but overall production showed a slight decrease. In November, the operating rate of domestic monomer producers is expected to remain high, with fewer maintenance plans, and production is expected to rise to nearly 210,000 mt.
Magnesium Ingot
According to SMM data, China's magnesium ingot production in October 2024 increased by 2.9% MoM. In October, smelters in the magnesium ingot market saw both production increases and decreases. The reasons for the decrease in magnesium ingot production were: firstly, normal maintenance of magnesium ingot smelters during the summer, with the original plan to resume production in early October, but due to weak market demand, the production resumption plans were postponed to mid-October. Secondly, some companies reduced production or halted operations due to sluggish end-use demand. The reasons for the increase in magnesium ingot production were: firstly, smelters that had previously halted production for maintenance gradually resumed operations, leading to an increase in magnesium ingot supply. Secondly, some manufacturers adjusted their daily production based on their orders and inventory levels.
In early November, China's magnesium ingot market overall showed a stalemate in supply and demand. Due to weak downstream demand and a lack of supportive factors in the raw materials market, industry insiders had a bearish sentiment, resulting in insufficient upward momentum for magnesium ingot prices. On the other hand, as magnesium ingot prices fell to the lowest level of the year, approaching the threshold of 17,000 yuan/mt, close to the breakeven point for many plants, smelters' sentiment to stand firm on quotes may strengthen. It is expected that magnesium ingot prices will fluctuate rangebound in November. As market prices fall below the breakeven point for smelters, one smelter plans to reduce production in November. Considering that two smelters are expected to resume production in November, it is anticipated that magnesium ingot production will increase to 77,000 mt.
Magnesium Alloy
According to SMM data, China's magnesium alloy production in October 2024 increased by 4.9% MoM. In October, the operating rate of magnesium alloy enterprises remained stable overall. The high aluminum prices greatly highlighted the cost-effectiveness of magnesium alloys, leading to a steady increase in end-use attention. Some magnesium alloy enterprises raised their operating rates, but the overall competition in the magnesium alloy market was fierce. The cut-throat competition in processing fee quotations for magnesium alloy orders intensified. In the short term, the likelihood of large-scale new capacity for magnesium alloys coming online is low. SMM expects magnesium alloy production in November to remain at 31,000 mt.
Magnesium Powder
According to SMM data, China's magnesium powder production in October 2024 decreased by 1.4% MoM. In October, magnesium powder enterprises generally maintained normal production, with some enterprises lowering their operating rates. Due to the sluggish orders for magnesium powder enterprises and strong wait-and-see sentiment among downstream enterprises amid the fluctuating magnesium ingot prices, some magnesium powder enterprises continued to maintain low production levels. A representative from a large magnesium powder enterprise stated that the weak domestic economic situation has led to thin steel mill profits and frequent changes in magnesium ingot prices, resulting in cautious procurement attitudes downstream. Considering that low-priced magnesium ingots may stimulate an increase in magnesium powder orders, SMM expects domestic magnesium powder production in November to remain at 8,000 mt.
Titanium Dioxide
According to SMM data, China's titanium dioxide production in October 2024 decreased by 3.5% MoM. The operating rate of titanium dioxide smelters in Panzhihua slightly declined due to inspections by the environmental protection inspection team. Additionally, demand in October was relatively sluggish, highlighting the supply-demand mismatch. With leading companies lowering prices at the beginning of October, market prices continued to weaken. Furthermore, with the potential announcement of anti-dumping duties by India and Brazil in October, competition in the titanium dioxide market intensified, and market sentiment was cautious. It is expected that titanium dioxide production in November will continue to decrease slightly.
In early November, the reduction in titanium dioxide prices made downstream orders more cautious, and market sentiment remained cautious. The pressure to deplete market inventory gradually increased. Due to the impact of anti-dumping duties, some export orders were temporarily delayed, leading to an increase in manufacturers' inventory. SMM expects that domestic titanium dioxide production in November will slightly decrease.
Sponge Titanium
According to SMM data, China's sponge titanium production in October 2024 saw a slight decline MoM. The anticipated September-October peak season did not materialize. In October, influenced by the downstream market, sponge titanium enterprises faced significant inventory pressure, leading many companies to reduce production, resulting in an overall decrease in sponge titanium production.
In early November, the supply-demand imbalance in the sponge titanium market persisted, and the downstream titanium material market demand remained sluggish. The sponge titanium industry faced considerable operational pressure, with new orders being weak and manufacturers' inventories showing an increasing trend. Despite a price adjustment notice issued by a sponge titanium enterprise in Xinjiang at the beginning of the month, the downstream acceptance of the new prices was low. SMM expects that sponge titanium enterprises will continue to reduce production in November, and domestic production is likely to keep decreasing.
Light Rare Earths
In October 2024, the domestic production of Pr-Nd oxide and Pr-Nd alloy both saw a slight reduction MoM. The main increase in Pr-Nd oxide production was in Jiangxi, while the main decrease in Pr-Nd alloy production was in Guangxi and Inner Mongolia.
According to the SMM survey, the rare earth market in October showed a significant decline compared to September. Some separation plants correspondingly reduced their production, and the operating rate of a few metal plants slightly decreased compared to September, but the overall reduction was not significant. Statistics show that the production of Pr-Nd oxide in October decreased by less than 2% MoM, and the production of Pr-Nd alloy in October decreased by only 0.6% MoM.
While the supply slightly decreased, the downstream demand saw a significant decline in October. The so-called "October peak season" totally fell short. Under the condition of weak supply and demand, it is expected that the rare earth market will operate stably in the future.
Medium-heavy Rare Earth
In October 2024, the production of dysprosium oxide and terbium oxide remained stable MoM, while the production of gadolinium oxide decreased by 3% MoM, and the production of holmium oxide increased slightly by 2% MoM.
According to the SMM survey, although the import of Myanmar ion-adsorption ore was halted in October due to the war in Myanmar, the domestic inventory of ion-adsorption ore remained sufficient due to the large import volume in the previous period. As a result, separation plants did not face a shortage of raw materials, and production remained stable. The demand for gadolinium iron downstream was poor, leading to a relatively weak market for gadolinium oxide, with the main reduction in production occurring in Jiangxi.
NdFeB
In October 2024, the domestic production of NdFeB magnetic materials saw a limited increase, up approximately 4% MoM. According to an SMM survey, on one hand, the National Day holiday led to a slight slowdown in magnetic material production as most enterprises took a break. On the other hand, the traditionally expected peak season did not arrive as anticipated, and downstream orders in October did not show significant growth. Only a few large enterprises saw a slight increase in orders in the new energy sector, while most small and medium-sized enterprises did not experience notable order growth, with production schedules not fully booked for a month. Downstream demand grew slowly, overall production remained relatively stable, and the production did not increase much compared to September.
SMM expects that stocking activities before Christmas in December will slightly increase foreign trade orders in November, thereby boosting the production of magnetic material enterprises. The production in November is expected to further increase.
Molybdenum Concentrate
According to SMM data, China's molybdenum concentrate production in October increased by approximately 1% MoM.
During October, domestic molybdenum market procurement demand steadily emerged, and overall consumption remained strong, driving molybdenum concentrate profits to stay at a high level. Against this consumption backdrop, major molybdenum mines maintained full-capacity production to meet downstream market demand, with no plans for maintenance or production cuts.
Looking ahead to November, downstream demand in the molybdenum market is expected to continue following up, coupled with relatively small spot inventory pressure for molybdenum concentrate. Most molybdenum mines are expected to continue maintaining high production levels with few maintenance plans. It is expected that molybdenum concentrate production will remain stable in November.
Ferromolybdenum
According to SMM statistics, China's ferromolybdenum production in October increased by approximately 2.6% MoM.
Recently, due to the higher-than-expected bidding procurement demand from steel mills and the low spot inventory of ferromolybdenum, new orders for ferromolybdenum smelters have been continuously increasing, and the production schedule has remained high, leading to a steady rise in ferromolybdenum production.
Looking ahead to November, the production schedule of downstream molybdenum-containing steel is expected to continue its upward trend. Since most steel mills still restock ferromolybdenum as needed and inventories are generally low, production demand is expected to further drive the increase in ferromolybdenum procurement, and ferromolybdenum production in November is expected to continue to rise.
Ammonium Paratungstate (APT)
According to SMM statistics, China's APT production in October decreased by approximately 5% MoM. The main reasons for the decline in production are the high domestic tungsten concentrate prices and the slow growth in market demand, leading to high raw material costs that cannot be effectively passed down the industry chain, resulting in frequent losses for APT. This situation has dampened the production enthusiasm of APT smelters, with some smelters conducting maintenance and reducing production in early and mid-October, resulting in a decrease in APT production.
Entering November, most APT smelters have completed maintenance and resumed normal production. With the increase in year-end stocking and long-term order delivery demand, the possibility of further production cuts by smelters is low, so APT production is expected to see a slight increase this month.
Silver
In October, 14 companies saw an increase in production, with a significant increase in production volume. The main reason is that silver prices showed a "V" shape trend, first falling and then rising, with prices continuously climbing in mid-to-late October, reaching over 8,000 yuan per kilogram. This led to high production enthusiasm among smelters, with some companies reducing inventory to take advantage of the high market prices and ensure profits.
Nine companies saw a decrease in production, resulting in a significant increase in silver production last month. The reasons for the production decrease among these companies include: 1) fluctuations in the silver content of raw materials, and 2) nearing the completion of annual production plans, leading to controlled production and inventory, and reduced production.
Silver Nitrate
In October, both the production and sales of silver nitrate declined. The main reason was that the photovoltaic industry chain generally took a break during the National Day holiday, resulting in only three weeks of natural production days in October. Additionally, the price of domestic No. 1 silver continued to rise in the second half of the month, maintaining a high level above 8,000 yuan per kilogram, which weakened downstream procurement and stocking demand. Currently, the industry chain is accelerating, and shipments are rapid, with domestic suppliers responding very quickly. As a result, the situation where each link in the photovoltaic industry chain holds its own inventory rather than downstream enterprises holding inventory has increased. Under the demand suppression of high silver prices, companies at each link are also engaging in destocking, clearing out previously low-priced stocks. Therefore, last month, the market saw production being less than sales at each link, with inventory reductions across the board. As the year-end approaches, silver prices remain relatively high, making stocking at this price level uneconomical. At the same time, companies need cash flow to cope with the year-end, so November sales will mainly be driven by just-in-time demand. The increase in production days will also bring about an increase in demand, and it is expected that production will rise in November.
Antimony Ingot
According to the SMM survey, the total production of antimony ingots (including antimony ingots, crude antimony conversion, antimony cathode, etc.) in China in October 2024 decreased slightly by 8.1% MoM compared to the statistics of September. Specifically, among the 33 surveyed producers by SMM, 15 producers halted production, 2 fewer than previous month; 14 producers reduced production, 2 more than previous month; and 4 producers maintained normal production, unchanged from previous month. From the perspective of antimony ingot production, the production in October declined again after a decrease in the previous month. Many market participants believe this is a normal phenomenon. Against the backdrop of current export controls and weak end-use demand, domestic raw material supply has shifted from tight to sufficient. Additionally, market information indicates that many producers have temporarily stopped purchasing raw materials and plan to further reduce or even halt production, reflecting an overall lack of market confidence to some extent. Consequently, the decline in production in October is also considered a normal phenomenon. Therefore, some market participants expect that the possibility of significant changes in the current market fundamentals in November is relatively small. SMM expects that the national production of antimony ingots in November 2024 may continue to decline compared to October.
Note: Since May 2022, SMM has been publishing the national production of antimony ingots (including antimony ingots, crude antimony conversion, antimony cathode, etc.). Thanks to SMM's high coverage rate in the antimony industry, the total number of surveyed antimony ingot producers by SMM is 33, distributed across 8 provinces nationwide, with a total sample capacity exceeding 20,000 mt and a total capacity coverage rate of over 99%.
Sodium Antimonate
According to SMM's survey of major sodium antimonate producers in China, the production of first-grade sodium antimonate in October 2024 increased by 11.78% MoM from September. After a decline in September, there was a rebound. The drop in September's production was mainly due to one producer halting production for two consecutive months and several others experiencing a decline in production. In October, this producer resumed a certain amount of production, but according to SMM, it has once again halted production since November.
Looking at the detailed data, among the 11 surveyed producers by SMM, two were either halted or in a testing phase. Most other sodium antimonate producers maintained stable production, with a few seeing an increase, leading to an overall rise in production. Market insiders indicated that, fundamentally, exports are unlikely to improve in the short term, and there are no significant signs of improvement in end-use demand. Additionally, many producers aim to reduce inventory for year-end cash flow, which is a bearish factor. Some producers are also planning to cut or halt production, which means they will stop purchasing ore and raw materials, leading to an increase in discounted sales of these materials. The scramble for raw material seen in H1 is no longer present. Therefore, the tug-of-war between longs and shorts in the market may continue. SMM expects the production of first-grade sodium antimonate in China to remain stable in November, although some market participants believe that a further decline in production is possible.
Note: Since July 2023, SMM has been publishing the national sodium antimonate production data. Thanks to SMM's high coverage rate in the antimony industry, the survey includes 11 sodium antimonate producers across five provinces, with a total sample capacity exceeding 75,000 mt and a total capacity coverage rate of 99%.
Refined Bismuth
According to SMM's survey of bismuth producers nationwide, China's refined bismuth production in October 2024 slightly decreased by 0.22% MoM compared to September 2024. After the first decline in September, production continued to decline in October. From the producers' production situation, due to the recent significant decline in bismuth prices and the easing of raw material shortages, producers' enthusiasm for purchasing raw materials has decreased to avoid losses from further price drops. Therefore, market participants generally expected the decline in October production. From the detailed data, among the 24 surveyed producers by SMM, 4 producers saw a significant decrease in production in October, while 4 producers saw a significant increase, resulting in a slight overall decline in bismuth ingot production compared to the previous month. Therefore, SMM expects that the national refined bismuth production in November 2024 is likely to remain stable, but a certain degree of decline cannot be ruled out.
Note: Since October 2022, SMM has been publishing national refined bismuth production data. Thanks to SMM's high coverage rate in the bismuth industry, the total number of surveyed refined bismuth producers is 24, distributed across 8 provinces nationwide, with a total sample capacity exceeding 50,000 mt and a total capacity coverage rate of over 99%.
Lithium Carbonate
According to SMM statistics, the total domestic production of lithium carbonate in October still fluctuated at highs, up 4% MoM and up 48% YoY. By raw material, the total production of lithium carbonate from spodumene in October increased by 17% MoM. The main reason for the increase is the rapid ramp-up of production lines switching from lithium hydroxide to lithium carbonate, along with a boost in orders under tolling agreements for some lithium chemical smelters due to favorable downstream demand. The total production of lithium carbonate from lepidolite in October decreased by 21% MoM, mainly due to the shutdown of a major lithium chemical smelter in Jiangxi, while the production of other lepidolite-based lithium chemical smelters remained stable. Therefore, the shutdown of this major smelter significantly impacted the output of lithium carbonate from lepidolite. The total production of lithium carbonate from salt lakes in October decreased by 3% MoM, affected by weather factors, which slightly reduced the operating rate of lithium chemical smelters in the region, leading to a continued decline in the total production of lithium carbonate from salt lakes. The total production of lithium carbonate from recycling in October increased by 3% MoM, continuing the growth momentum from September. The main reasons for the increase in production are the continuous rise in orders under tolling agreements for waste batteries from a major battery plant and the boost in recycled lithium carbonate production due to favorable downstream demand.
Entering November, downstream production schedules far exceed expectations. Driven by sustained favorable downstream demand, most lithium chemical smelters have increased their production schedules. The total domestic production of lithium carbonate is expected to increase by 5%-7% MoM.
Regarding the current spot market for lithium carbonate, the center of spot transaction prices slightly rebounded in October. In the context of high production sentiment downstream, upstream lithium chemical smelters have a strong sentiment to stand firm on quotes. Considering that the cumulative inventory of lithium carbonate remains at a relatively high level, the rebound in spot prices is limited. It is expected that with the continuous rise in demand, the spot price of lithium carbonate will continue to have an upward trend, accompanied by fluctuating rebounds.
Lithium Hydroxide
According to SMM, China's lithium hydroxide production in October 2024 slightly decreased by about 1% MoM, but up 40% YoY.
Supply side, from the perspective of raw material types, the production reduction in causticizing lines is more significant. It decreased by 5%-10% MoM and about 50% YoY. The main reason is that since H2 2024, although the overall trend of lithium carbonate prices has been downward, due to favorable demand and support from the futures market, there have been several upward adjustments during this period. However, lithium hydroxide prices have continued to decline. According to SMM, recently, the price spread between non-battery-grade lithium carbonate and coarse lithium hydroxide particles has reached 5,000 yuan/mt or more. The economics of causticizing have continued to deteriorate, coupled with overall weak market demand, resulting in significant losses for producers. Besides some companies' new production lines ramping up lower-than-expected and maintaining low production, other companies' existing production lines have also seen slight reductions. On the smelting side, lithium hydroxide production remained basically unchanged MoM, but up about 43% YoY. Most companies produce according to orders, keeping production relatively stable. Some production lines switched from lithium hydroxide production to lithium carbonate, while some producers saw ramp-up of their new production lines.
Demand side, in the past two months, some ternary cathode materials companies have seen a slight increase in orders due to good sales of new car models overseas. However, most other companies have seen a downward trend in production due to reduced orders. Overall, the production of high-nickel ternary cathode materials declined in October and is expected to continue declining in November.
Import and export side, in September, China's lithium hydroxide export volume increased by 22% MoM and 15% YoY. Exports to South Korea and Japan accounted for 80.71% and 16.22% of China's total exports for the month, respectively, up 43.44% and 30% MoM, and up 24.3% and down 19.48% YoY. As October and November are the periods when the peak season fades and inventory adjustments end, coupled with no other factors boosting the overseas lithium hydroxide market, the export volume of lithium hydroxide is expected to decrease slightly in October and November.
In November, China's lithium hydroxide production is expected to remain relatively stable compared to October, mainly because most producers produce according to orders before year-end, keeping production stable.
Cobalt Sulphate
In October, China's cobalt sulphate production decreased by 1% MoM and 28% YoY. The main reasons for the production decline in October were: the current spot demand was muted and social inventory was relatively high, leading to a continuous decline in spot prices. Meanwhile, due to the firm performance of raw material prices, cobalt sulphate smelters faced significant cost pressure, resulting in losses. Consequently, the overall market operating rate remained at a low level. It is expected that in November, the supply-demand relationship for spot market will hardly reverse, so cobalt sulphate production is likely to continue its downward trend.
Co3O4
In October, China's Co3O4 production saw a slight increase both MoM and YoY. The main reasons for the production increase in October were: a slight recovery in downstream LCO demand, leading Co3O4 smelters maintaining a high operating rate, and the resumption of production by companies that had previously undergone maintenance. Therefore, the market demand for Co3O4 still existed, driving a slight increase in the production schedule of Co3O4 companies. However, it is expected that in November, due to the downstream LCO demand becoming mediocre, the purchase willingness for Co3O4 will weaken, and thus Co3O4 production is expected to decline MoM, with a very limited YoY increase.
Ternary Cathode Precursors
In October 2024, China's production of ternary cathode precursors increased 0.7% MoM and was down 0.3% YoY. On the supply side, production in October declined for some top-tier enterprises due to production halts for maintenance and weakened overseas demand. However, production slightly increased for certain top-tier enterprises as end-use market demand picked up at month-end. Production for non-top-tier ternary cathode precursor enterprises remained largely unchanged from the previous month. On the demand side, domestic end-use market purchase willingness improved, leading to a slight increase in the production schedule of ternary cathode materials producers. The rise in production schedules at month-end resulted in a slight uptick in the precursor market in October. Looking ahead to November, due to year-end destocking and weakening end-use demand, China's production of ternary cathode precursors is expected to decrease 2% MoM and increase 4% YoY. The overall market is expected to exhibit a weak supply and demand pattern.
Ternary Cathode Materials
In October 2024, China's production of ternary cathode materials increased 2.6% MoM and was up 4.8% YoY. The overall operating rate in October was 41%, showing a slight increase from September. Overseas, the overall production saw a slight decrease compared to September. In terms of series proportion, the 5-series ternary cathode materials accounted for 27%, the 6-series for 30%, and the 8-series for 35.6% in October. Compared to the previous month, the 5-series saw a significant increase, while the proportions of the 6-series and high-nickel 8-series declined. The market structure saw some changes, with Ronbay, Reshine, and Xiamen Tungsten occupying the top three positions in industry production for the month. The CR3 was 44.5%, CR5 was 58%, and CR10 was 79%, indicating a decrease in market concentration compared to September. On the demand side, global production of ternary battery cells grew slightly by 2.5%, with the increase mainly coming from China. The increase in overseas ternary battery cells was relatively small, and demand remained relatively weak. It is expected that the production of ternary cathode materials will decline in November due to the slowdown in stocking pace by downstream battery cell manufacturers and a decrease in orders.
Iron Phosphate
In October, China's iron phosphate production increased 6% MoM and was up 81% YoY. Supply side in October, first and second-tier iron phosphate companies had saturated orders, even requiring overproduction to meet deliveries. The demand for iron phosphate was strong, coupled with the winter stockpiling period for fertilizers, leading to tight supply of upstream raw materials such as phosphoric acid and industrial monoammonium phosphate. This caused an increase in phosphorus resource prices and raised the cost of iron phosphate. However, iron phosphate companies' attempts to raise prices had little effect. In October, downstream LFP orders were numerous, leading to increased demand for iron phosphate. Some integrated companies even faced shortages in their self-supplied iron phosphate and chose to purchase externally to supplement. Iron phosphate production is expected to continue increasing in November, driven by the demand for LFP. The production outlook for iron phosphate is optimistic, but losses remain difficult to reverse. China's iron phosphate production is expected to increase 5% MoM and be up 109% YoY in November.
LFP
In October, China's LFP production increased 4% MoM and was up over 100% YoY. Supply side, leading and second-tier LFP cathode companies operated at high capacity, with most companies' operating rates above 80%, resulting in October's LFP supply hitting a new high compared to September. LFP companies saw a significant increase in orders at the end of Q3 and the beginning of Q4, with listed companies pushing for year-end volume. Previously, due to low processing fees from battery cell manufacturers, less production meant less loss, leading to low production enthusiasm. This increase in production is a result of companies balancing shipments and revenue for 2024. Demand side, downstream battery cell manufacturers' orders continued to increase in October, with NEV and energy storage maintaining strong demand. NEV market, many new car models were launched earlier, and year-end is the peak season for NEV market price promotions. Automakers and battery cell manufacturers may prepare inventory for early 2025 considering factors like subsidy reductions next year and the Chinese New Year holiday. Energy storage market, the domestic grid connection deadline (December 30) and numerous new overseas energy storage projects drove demand. Overall, LFP saw a significant market increase in October, and November is expected to differ from previous years, with production not decreasing but increasing, estimated to be up 7% MoM and up 145% YoY.
LCO
In October, China LCO production declined, down 15% MoM from September. The production schedule of LCO was mainly dominated by a few top-tier enterprises, with the CR5 accounting for about 90%, indicating that the market still maintained a high level of concentration. Downstream demand weakened due to the slow consumption of new inventory, but this had little impact on top-tier enterprises, whose operating rates remained stable. The production decline was more significant among small and medium-sized enterprises due to a drop in orders. Currently, the prices of main materials are still at low levels, and with weakening demand, costs are difficult to support effectively. It is expected that LCO prices will continue to decline slowly. The production schedule for LCO in November is expected to weaken further, down 7% MoM from October.
LMO
In October 2024, China's LMO production saw slight increases both YoY and MoM. The main reason was that the price of lithium carbonate remained relatively stable compared to September, which gradually stabilized LMO prices and boosted production slightly. The pessimistic sentiment among most enterprises also eased somewhat. It is expected that in November, the demand for LMO will grow weakly, and enterprises will maintain stable production. However, due to the overall supply surplus in the market, some enterprises may choose to further reduce production to cope with inventory surplus or downward price pressure. According to market feedback, China's LMO production in November is expected to decline slightly MoM.
*Survey Methodology
The SMM production survey was conducted by professional analysts through telephone and on-site surveys, tracking Chinese metal producers on a monthly basis and issuing the China Metal Production Report based on the findings.
During the survey, the basic coverage ratio of the sample was ensured and continuously expanded; at the same time, factors such as capacity scale, geographical distribution, and the nature of enterprises were considered to reasonably select and allocate samples, making each sub-item data representative.
SMM releases China Metal Production Report on our official Chinese website (www.smm.cn) and English website (www.metal.com) around the 10th of each month.
