“It’s the end of the year. To avoid holding excess inventories for better annual financial performance, consumers have been keeping their lithium inventories at a minimum level,” a Chinese lithium producer source told Fastmarkets. Many downstream cathode active materials (CAM) producers will reduce production in December and battery producers have been destocking, Fastmarkets understands. China’s lithium iron phosphate (LFP) producers will reduce production by 10-20% in December, while nickel-cobalt-manganese (NCM) CAM producers are likely to cut production by 30-40%.
Reducing stock on hand for the financials year end is something i hadn't actually even considered as being in play. Seen companies do it here, but always felt it was a short term fix, i.e. improved December, but buggers quarter 1 when you have to restock, also exposes you to a big price risk if commodity prices improve because everyone else had the same destocking in December idea.
The following article on the same topic from FastMarkets
Full article here : https://www.fastmarkets.com/insights/south-korea-to-invest-29-billion-in-domestic-battery-materials-industry/
Some key points that caught my attention:
"Some of the funding will be used to invest in manufacturing production facilities in United States to help companies gain tax breaks from the US Inflation Reduction Act (IRA)."Given the IRA also includes US Free Trade agreement countries, i can't help but think this would cover investments from Korean companies in RNU."The South Korean government also plans to help companies build stockpiles of critical materials, such as lithium and cobalt, to ensure 100-day availability by 2031 to combat any potential supply chain disruptions."
Basically a battery minerals version of the strategic oil reserves most western countries have, certainly won't hurt demand later this decade, especially if other countries start to follow.
