China's plans to offer stimulus measures to boost energy transition efforts are expected to favor sectors such as electric vehicles and photovoltaic panels in 2024, a trend that would support consumption of nonferrous metals such as aluminum, copper and lithium, industry sources said March 6.
China's Premier Li Qiang, in his work report released during the country's key annual political gathering on March 5, emphasized the important role EVs will play in the country's economy.
Li proposed several supportive measures, including development of new energy systems and storage, and boosting large-scale wind power photovoltaic bases.
Battery metals
EVs and energy storage sectors, which are the major consumers of battery metals, are expected to grow steadily this year driven by the expected stimulus measures from the government, sources said.
China's three state-backed vehicle producers First Auto Work, Dongfeng and Changan were called on to increase their EV outreach. As a result, EV production from these vehicle producers is expected to see an increase this year, some sources said.
However, the proposed measures aimed at EVs and energy storage sectors did not really alleviate concerns around battery and lithium chemicals oversupply in China, according to sources.
Due to weak downstream demand, most medium-to-small sized battery makers are running below 40% of their capacity currently, which could explain why the demand for cathode material and battery metals remained sluggish, said a Chinese battery maker source.
The weak outlook for lithium markets is also reflected in the falling EV sales in China. China's EV sales declined in January, falling below 30% of total vehicles sales reported in China during the month, according to latest data from the China Association of Automobile Manufacturers.
Lithium markets are expected to remain oversupplied in 2024, keeping spot prices subdued, sources said.
Platts assessed battery-grade lithium carbonate at Yuan 109,000/mt ($15,141/mt) on a DDP China basis March 5, down Yuan 1,000/mt on the day, , S&P Global Commodity Insights data showed. This came after a short-lived rebound driven by talks of environment-related checks on lithium salt producers and output cuts of Australian miners.
Aluminum and copper
China's proposed measures and expected higher consumption from energy transition-related sectors could offset the weak growth seen from the country's construction sector, which traditionally has been a strong consumer of aluminum and copper, according to sources.
Rising demand from the EV, photovoltaic and lithium battery sectors would be the three mainstays of aluminum and copper demand in China in 2024, state-run research agency Antaike said.
China's aluminum consumption from these three sectors is expected to reach 7.34 million mt in 2024, up 26% from the previous year, according to Antaike.
The government work report released March 5 also mentioned that China will continue to push forward with timely deliveries of presold homes in 2024.
However, China's construction sector is still expected to see tepid demand in 2024, pressured by the decline in housing starts over the past two-three years, Antaike said. The sector's aluminum demand is set to fall 2.5% on the year to 15.2 million mt in 2024, it added.
The growth of floor space completed usually lags two-to-three years behind the growth in housing starts.
Copper demand from construction and home appliance sectors typically makes up more than 20% of the country's total demand, market sources said.