Global cathode and precursor short-term outlook April 2023

China’s Electric Vehicle (EV) sales continue to have a significant effect on the global market, their slow start to the year culminates in a decrease in Q1 sales despite double digit growth in the European and US markets. Germany sales are still in decline following the ending of EV subsidies in January. April will also see subsidies for EVs end in certain provincial governments in China. This may see consumers delay EV purchases and force OEMs to cut prices further. Q1 cathode consumption recovered to the levels at the end of Q3 2022, with the LFP taking the majority market share. We see this trend continuing over the next ten years as a low-cost solution to the mass market. Weaker sales in China have stagnated the growth of precursor supply, we expect this to recover in H2 2023. Over the longer term we expect NCM to grow 11% annually with NCA remaining flat. South Korea, Japan and Europe remain the primary export destinations for Chinese NCM.