Supply of Vital Lithium Derivatives For Battery Production will Ease in China

Singapore: China's supply deficit for Lithium and derivatives such as Lithium Hexafluorophosphate will likely narrow down soon in December 2022. In terms of domestic demand, the inquiries from the downstream EV battery manufacturers will plunge as the deadline for the revocation of vital subsidies approaches close, and terminal consumption has also weakened over the past couple of months. The EV automotive vehicle sales drop has also supported the upcoming outlook and cumulative impact that spread across the value chain.

In addition, the battery manufacturers decided to digest the inventories by the end of 2022. As per the market sources, there are ample inventories to sustain the productions for the next four months, from November 2022 onwards. In response, the demand for Lithium derivatives such as Lithium Iron Phosphate (LFP) and Lithium Hexafluorophosphate (LiPF6) has plunged considerably over the past few weeks. The impact substantially affected the performance of the major Lithium players in the overseas capital market.

On the supply side, the mainstream manufacturer in China mainly delivered the cargo for the pending deliveries over ongoing long-term contracts. The spot market activities have concluded to perform below average in November and the first half of December 2022. At the same time, Lithium Hexafluorophosphate manufacturers have attained a wait-and-see approach and adjusted the operating rates to sustain the prevailing market dynamics despite the peak destocking period. Manufacturers seek to destock the end-use product's running inventories and restrict the cash flow outside the organization to showcase a better financial performance over their annual reports.

As per the ChemAnalayst pricing intelligence, the cumulative Lithium Hexafluorophosphate production output stood at 12,062 MT in December 2022, narrowed by 1% on a month-on-month basis. As per the market experts, the market outlook is likely to prevail throughout the month, and there are minimal changes regarding any shift in the market dynamics. In response, it has been anticipated that China's Lithium Hexafluorophosphate output will further plunge in December 2022, ranging between 5% to 8% on a month-on-month basis.