Chinese LCO output falls in June on summer lull

Chinese lithium cobalt oxide (LCO) output fell to 6,800t in June, down by 9.3pc from May because of the summer lull in the consumer electronics products industry.

Domestic output rose by 6.3pc from June 2020. The country's LCO production increased to 46,600t in the first half of 2021, up by 58pc from on the year. Xiamen Tungsten New Energy, Hunan Shanshan, Tianjin B&M and Guoan Mengguli are China's top four LCO manufacturers, with combined output accounting for 79pc of domestic production.

The global trends of working from home and remote learning have bolstered sales of portable PCs and tablets, boosting demand for battery cathode materials since the outbreak of the Covid-19 pandemic. The introduction and sales of 5G phones is also accelerating demand growth of LCO.

China's 5G phone shipments rose to 16.739mn in May, up by 7pc from a year ago, accounting for 72.9pc of total mobile phone shipments. Some 108mn 5G phones were shipped in China's domestic market during January-May, up by 134.4pc year-on-year, accounting for 72.8pc of total mobile phone shipments, according to data from the China Academy of Information and Communications Technology.

China is the biggest LCO production hub in the world, producing nearly 79,000t in 2020, up by around 35pc from a year earlier, accounting for 75pc of global total production.

"LCO demand weakened in May because of an accumulation of inventories at both producers and consumers. As a result we are unsure about the future market in the coming months despite the traditional industry peak season at the end of the third quarter," said a major LCO producer in China. The Covid-19 pandemic in India has weighed on demand for lithium-ion battery cells, which may also pressure LCO demand in China as China is a key exporter of lithium-ion battery cells to India, according to market participants.

LCO output in China t