China’s automotive output, sales drop in April on buyer caution

China’s automotive output and sales dropped in April 2023 versus the prior month, with both largely subdued by general caution among consumers that had been fueled by the price wars in the automotive sector during the month

The auto price war had spread to both conventional carmakers and electric vehicle (EV) manufacturers last month, resulting in a wait-and-see attitude among consumers, according to the China Association of Automobile Manufacturers (CAAM).

But automotive output and sales jumped on an annual basis in April 2023, due to the small base comparison in the month last year. In April 2022, China’s automotive supply chain was choked by controls on new Covid-19 outbreaks, resulting in limited output and sales.

Chinese car manufacturers produced 2.13 million units in April 2023, down by 17.5% month on month, but up by 76.8% year on year. Meanwhile, sales in April 2023 totaled 2.16 million units, down by 11.9% month on month, but up by 82.7% year on year, according to CAAM.

China produced 640,000 EVs last month, down by 5.0% month on month, but up by 110% year on year. EV sales in April 2023 amounted to 636,000 units, down by 2.6% month on month, but up by 110% year on year.

China’s automotive exports continued to trend upward in April 2023 with a total of 376,000 units shipped, up by 3.3% month on month and up by 170% year on year. EV exports totaled 100,000 units last month, an increase of 28.6% month on month and up by 840% year on year, figures from CAAM show.

Cold-rolled coil (CRC) prices fall to five-month low

Fastmarkets’ weekly price assessment for steel CRC, domestic, ex-whs Eastern China, was 4,450-4,500 ($644-651) yuan per tonne on Friday May 12, down from 4,630-4,680 yuan per tonne a month earlier.

The latest assessment is unchanged from a week earlier and marks the lowest level in about five months.

Continued weakness in demand and waning costs due to lower prices for steelmaking raw materials has kept market sentiment subdued and weighed on steel prices, market participants said.

CRC inventories held by traders in 21 major Chinese cities totaled 1.25 million tonnes by the end of April, up by 30,000 tonnes (2.5%) from a year earlier, according to data from the China Iron and Steel Association.

The lingering issue of insufficient orders amid weak demand at home and abroad, as well as lower costs that deter mills from reducing production and a weaker market outlook have forced Chinese mills to lessen their offers.

Leading Chinese steelmaker Baoshan Iron & Steel said on May 10 that it would lower its CRC base price by 200 yuan per tonne for domestic bookings in June compared with the previous month.

The price adjustment for June marked Baosteel’s first CRC price cut in nine months.

“The order performance has been poor since April. The automotive sector remains sluggish this year, while other sector such as real estate and infrastructure construction are not seeing signs of significant improvement,” a mill source in northern China said.

A trader in eastern China was not optimistic about demand in the coming months either, and he said he expects market sentiment to remain subdued.

Aluminium die castings (ADC) 12 market stays subdued

China’s domestic aluminium ingot alloy ADC 12 market remains weak amid reduced demand from the downstream automobile industry.

Fastmarkets’ price assessment for aluminium alloy ADC12, exw dp China fell to 18,100-18,300 yuan per tonne on May 10, from 18,300-18,500 yuan per tonne a week earlier. The price was assessed at 18,700-18,900 yuan per tonne at the beginning of April.

The automobile industry is one of the key downstream consumers of ADC 12. Supplier sources told Fastmarkets they had seen less demand from the automotive sector in the past month.

“Domestic buyers prefer to use their stocks and are not in a hurry to purchase more materials. Once they have the demand, they only conduct purchases on a hand-to-mouth basis. They know there is ample supply of the alloy,” a supplier source said.

A second supplier told Fastmarkets that he had received very few spot inquiries recently and expected the situation to last for a while.

“Spot trading has been slim. I only maintain sales through long-term contracts signed with large companies,” the second supplier source said.

Battery materials prices under downward pressure

Lithium prices in China mostly trended downward throughout April, reaching a low on April 20 last seen in October 2021 amid persistently bearish sentiment and muted spot demand.

Prices retreated during the first half of April, with most consumers purchasing spot materials on a hand-to-mouth basis due to limited demand while also exercising caution on the expectation that prices could drift further lower.

“Because lithium prices were on the downtrend, buyer caution intensified, and spot demand was further limited,” a Chinese lithium trader said.

But market sentiment started to improve and prices started to rebound from the end of April, with traders starting to restock when they believed the spot prices were close to a bottom. Lithium sellers were also trying to push up prices amid the rebound in liquidity, Fastmarkets heard.

Demand for lithium salts, however, remained weak due to consumers’ ample stocks and low operation rates, despite some bargain-hunting by traders, market participants said.

Fastmarkets’ price assessment for lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 230,000-260,000 yuan per tonne on May 11, up by 30,000 yuan per tonne from 200,000-230,000 yuan per tonne a week earlier. The assessment stood at 150,000-180,000 yuan per tonne on April 20.

Fastmarkets’ price assessment for lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price range exw domestic China was 230,000-250,000 yuan per tonne on May 11, narrowing upward by 10,000 yuan per tonne from 220,000-250,000 yuan per tonne a week earlier. The price was assessed at 180,000-210,000 yuan per tonne on April 20.

Prices for cobalt sulfate, another key battery raw material, similarly continued to trend downward in April, because demand from downstream precursor makers remained weak and bearish sentiment weighed on the market as a whole.

Fastmarkets’ price assessment for cobalt sulfate, 20.5% Co basis, exw China was 34,500-35,000 yuan per tonne on May 12, narrowing upward by 500 yuan per tonne from 34,000-35,000 yuan per tonne from May 10, but down by 2,500-3,000 yuan per tonne from 37,000-38,000 yuan per tonne on April 7.

“Demand for cobalt sulfate was weak in the past month, and prices have basically reached the historical low of the recent three years. Though prices started to rebound from last week driven by increasing inquiries, we are not sure whether demand will really pick up greatly in coming weeks,” a cobalt sulfate producer source said.

Meanwhile, as many as 60% of nickel sulfate producers in China have cut production since late March, due to mounting pressure from shrinking margins with sulfate prices on a downward trend, sources said.

This has lent some support to the market despite still-weak demand, sources added.

Fastmarkets’ price assessment for nickel sulfate min 21%, max 22.5%; cobalt 10ppm max, exw China was 31,500-32,500 yuan per tonne on May 12, unchanged from a week earlier. Prior to this, the price had fallen for straight nine weeks.

Elsewhere, the market for manganese sulfate, another upstream raw material for the lithium-ion battery manufacturing, has remained stable since the middle of April after hitting a record low.

Liquidity in the manganese sulfate market was extremely slow in April.

“The market is still experiencing weakness on the fundamental side with supply exceeding demand. Downstream producers would not have any trades done when the outlook remained uncertain,” a manganese sulfate producer source said.

Fastmarkets’ weekly price assessment for manganese sulfate 32% Mn min, battery grade, exw mainland China was 5,500-6,000 yuan per tonne on May 11, unchanged since April 13.

Meanwhile, destocking among downstream battery manufacturers continued to add pressure to the upstream graphite market in the past month, according to sources.

“The major issue is that few people are buying nowadays. This has already led to the idle of majority of spherical graphite operation lines in China, as well as the output cut for flake graphite producers,” a trader in China said.

Graphite operations in Luobei, Heilongjiang province, a major production hub, were said to have been interrupted intermittently by local environmental inspections during April and May.

“The market weakness could remain for a while. There is too much supply on both natural and synthetic sides. And despite the current operation cuts in some regions, it is easy for them to pick up production once there are signs of demand recovery, indicating further oversupply in the graphite market,” a producer source outside of China said.

Fastmarkets’ weekly price assessment for graphite flake 94% C, -100 mesh, fob China stood at $670-720 per tonne on May 11, unchanged from the previous assessment following four consecutive falls since the middle of April.

The weekly price assessment for graphite spherical 99.95% C, 15 microns, fob China was $2,200-2,500 per tonne on May 11, stable from the previous week, but down by 2.08% in the past month.the past month. You can find out more information on our dedicated page for graphite pricing data.

Keep up to date with global market insights and predictions for 2023 and beyond with our NewGen forecasts.

What to read next
This development has led to a tightening market supply and bullish sentiment among traders, despite the immediate aftermath not showing a price hike
Read the full transcript from episode one of Fast Forward podcast with Andrea Hotter, where she interviews Helaina Matza, Special Coordinator for Global Infrastructure and Investment at the US Department of State
The battery recycling market is witnessing a dynamic evolution, marked by eight key trends shaping the industry's landscape
The global decarbonization drive is turning electrical steel into one of China's key ferrous products, with electrical steel exports surging in recent years, sources told Fastmarkets
A number of hurdles are still hindering the development of a Western battery supply chain, despite support from the US Inflation Reduction Act (IRA), according to Kevin Chan, US-based spodumene and lithium producer Albemarle’s vice president of the Asia Pacific region
Insufficient investment in anode supply chains in the West has become one of the key challenges to the implementation of US localization policies for electric vehicle (EV) and battery ecosystems