Since the mid of the first quarter, China is consistently struggling with the COVID-induced effects on the market dynamics and the gyration in the several commodity cycles. As the Chinese authorities took strict measures to restrict the spread, the situation marly improved, and the authorities were decided to extend the lockdown till April end. Such development in the norms has severely impacted the industrial activities amidst the inadequate demand from the downstream industries and forced the producers to restrict the operational loads at several key upstream value chains to protect the netbacks on production costs.

The resurgence of COVID in China has deteriorated the new energy industry chain, and the impact was majorly concentrated in the automotive industry amidst the restricted public movement. Several market giants have stopped the operations with no certainty about the resumptions. The market participants informed that the production halted due to the shortages of several raw materials. The jolt from the downstream sectors had levied a direct impact on the upstream batteries industries as the order plunged rapidly and affected the annual production margins of numerous manufacturers. According to the market analysis, after accounting the closure of numerous production facilities combined has reduced the demand for LFP by 10,000 – 12000 MT and Lithium salts by 3000-4000 MT impacting the demand outlook with a plunge of 15%-20% in April. In response, several battery players in the Chinese domestic market has reduced the intake of the key raw material such as Lithium Carbonate, Lithium Hydroxide, and Spodumene which layout a larger impact on the offered quotations from the producers.

According to ChemAnalyst,  Even though the market outlook in terms of sales the Chinese market observes a sudden jump of 128% on a year-on-year basis. The new energy vehicles market rebounded after remaining suppressed during the Lunar New Year holidays followed by the Winter Olympics. Although the current market dynamics are not optimistic and several market participants were anticipating that it prevails its impact in the upcoming next month.