EV demand slowdown cuts S Korea’s LGES' profit in 1Q

  • Spanish Market: Battery materials, Metals
  • 25/04/24

South Korea's top battery manufacturer LG Energy Solution (LGES) reported significant lower revenue and profit in January-March, because of lower battery metal prices and slower electric vehicle (EV) demand.

LGES' revenue in January-March fell by 23pc on the quarter and 30pc on the year to 6.13 trillion won ($4.46bn), owing to lower demand for EV pouch cells and energy storage system (ESS), with "prolonged metal price impact" affecting its average selling price.

The firm reported W157bn of operating profit in January-March, but would have reported an operating loss of W32bn if it did not receive almost W189bn in US Inflation Reduction Act (IRA) tax credits. But this was still a sharp drop from W633bn of operating profit for January-March 2023. The lower revenue and a demand slowdown in the EV market led to utilisation rate adjustments that weighed on its financial performance.

The firm reaped a net profit of W212bn during the quarter, which was up by 12pc on the quarter but down by around 62pc on the year, likely significantly propped up by the US' IRA tax credits. LGES said it will continue to invest despite the difficult market environment, but will "adjust" the size of its capital expenditure and execution speed "as per priority".

Battery project updates

LGES and automaker General Motors in early April completed the first battery shipment out of their second Ultium battery cell factory in US' Tennessee. The plant's capacity is expected to gradually expand to 50 GWh/yr, said LGES.

Construction progress at the firm's battery manufacturing complex in US' Arizona is also on track, said the firm. Ramped up capacity is expected to be 53 GWh/yr, which will comprise 36 GWh/yr of 46-series cylindrical battery for EVs and 17 GWh/yr of lithium-iron-phosphate battery for ESS.

LGES' 10 GWh/yr Indonesian battery production joint venture with South Korean conglomerate Hyundai Motor has also started mass production.

Its battery module production joint venture with automaker Stellantis in US' Ontario, which encountered a halt in construction in May last year, will start operations in the second half of 2024. The factory has a planned capacity of 45GWh/yr and was supposed to begin operations early this year.

LGES earlier this year inked a second agreement with Australian firm Wesfarmers Chemicals, Energy and Fertilisers for lithium concentrate supply. The firm will continue building a raw materials supply chain within regions that have a free trade agreement with US, it said.


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05/06/24

Indonesia’s Merdeka posts lower nickel output in 1Q

Indonesia’s Merdeka posts lower nickel output in 1Q

Singapore, 5 June (Argus) — Indonesian nickel firm Merdeka Battery Materials' (MBMA) production decreased during January-March from the previous quarter, weighed down by wet weather issues and a lack of equipment availability. MBMA produced 2.1mn wet metric tonnes (wmt) of material at its Sulawesi Cahaya Mineral (SCM) mine during the quarter, down by 36pc from the previous quarter's 3.3mn wmt. Output was weighed down by higher-than-average rainfall and lower-than-planned contractor equipment availability. Limonite ore supplies fell by 25pc from October-December to 1.2mn wmt, while the volume of saprolite ore more than halved to 0.5mn wmt over the same period. The firm did not provide its production figures for the year-earlier period. The production guidance for limonite and saprolite ore for 2024 has been kept largely steady at 10mn-11mn wmt and 4mn-5mn wmt, respectively. But production volumes are anticipated to increase in 2025, with PT ESG New Energy Material's (PT ESG) feed preparation plant commissioning by mid-2025. Limonite ore sales to PT ESG is expected to be about 5mn wmt/yr. The SCM mine supplies limonite ores to the Huayue Nickel Cobalt high-pressure acid leaching (HPAL) plants and saprolite ore to MBMA's rotary kiln electric furnaces (RKEF) smelters. The RKEF smelters produced 20,900t of nickel in nickel pig iron (NPI) during January-March, falling by 5.6pc from the previous quarter's 22,141t. Matte output was at 12,041t of nickel, a 5.1pc drop from 12,684t in the previous quarter. The company maintained the 2024 production guidance for its nickel intermediates at 85,000-92,000t of nickel in NPI and 50,000-55,000t of nickel in matte. Developments at MBMA's projects remained on track during the quarter. Widening works on the main haul road connecting the SCM mine to Indonesia's Morowali Industrial Park, and the construction of a more direct haul road to replace the use of a third party's road are underway. A collaboration with Chinese cathode precursor and nickel producer Green Eco-Manufacture to develop PT ESG's HPAL plant, with a nameplate capacity of 30,000 t/yr of nickel in mixed hydroxide precipitate (MHP), is projected to be commissioned in late 2024. MBMA has another HPAL plant partnership with Brunp, a subsidiary of China's largest power battery manufacturer Contemporary Amperex Technology, with a nameplate capacity of 60,000 t/yr of nickel in MHP. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

China's NEV penetration to hit 40pc in 2024: CAAM


05/06/24
05/06/24

China's NEV penetration to hit 40pc in 2024: CAAM

Beijing, 5 June (Argus) — China's new energy vehicle (NEVs) penetration will likely rise to 40pc by the end of 2024, according to the China Association of Automobile Manufacturers (CAAM). The number of users that intend to buy an NEV is already on par with those that want to purchase internal combustion engine (ICE) vehicles, CAAM said. Nearly 30pc of users, surveyed by CAAM and domestic automotive information service DCar, intend to trade in their old vehicles for a NEV in a year. And over 60pc of car users deem it "very necessary" to trade in their old vehicles for NEVs, CAAM added. China's NEV penetration has been increasing in the past few years, driven by the country's decarbonisation plans and supportive policies to accelerate EV development. These measures, such as boosting EV production and spurring battery technological innovations, are regarded as China's efforts to catch up with foreign competitors in the global automotive industry given its slowing development in ICE vehicles, according to industry participants. China's NEV penetration reached 26pc of the country's total automotive sales in 2022, rising to 31.6pc in 2023, 32.8pc in March, 36pc in April and 32.4pc over January-April. It aims to raise the share of NEV in its total vehicle sales to 45pc by 2027, according to a plan issued by the government earlier this year. But the industry is facing a slowdown in sales growth because of some challenges. CAAM estimates the country's NEV sales will rise to 11.5mn units in 2024, up by 21pc from 9.495mn in 2023. This growth is slower than the 38pc rise from 2022 to 2023. One of the main reasons why many potential buyers have not opted to buy an NEV is because of its shorter driving range compared with gasoline cars. CAAM expects that more than 40pc of potential NEV buyers prefer to buy a hybrid car, compared with 31pc for battery EVs. Over 60pc of potential battery EV buyers want a car with more than 500km of driving range, including 20pc of buyers requiring 700-1,000km. CAAM's report also shows that most consumers can afford and favour NEVs priced in the 100,000-200,000 yuan ($13,801-27,603) range. How to provide competitively-priced vehicles is a subject that requires long-term research from EV manufacturers, CAAM said. China has introduced a series of new supportive measures recently to drive its NEV sales growth, including a plan to remove purchase restrictions during 2024-25. But some industry participants are not sure that this plan is applicable in major cities particularly Beijing, which has severe traffic congestion. Beijing has the largest number of motor vehicles in China, with a vehicle population of nearly 7.6mn units as of the end of 2023. China's BEV and PHEV sales during 2022-24 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US light vehicle sales increased in May


04/06/24
04/06/24

US light vehicle sales increased in May

Houston, 4 June (Argus) — Domestic light vehicle sales rose to a seasonally adjusted rate of 15.9mn in May, a third straight month of annual increases. Sales of light vehicles — trucks and cars — increased from a seasonally adjusted annual rate of 15.8mn in April, the Bureau of Economic Analysis reported today. May's rate, the highest of 2024 so far, rose from a rate of 15.5mn units in May last year. Inflationary pressures that have kept borrowing costs elevated have failed to deter American consumers from spending. The US Federal Reserve has signaled it will not lower its target lending rate from a 23-year high until policymakers are more confident that inflation is slowing at a sustainable pace. Still, a contraction in manufacturing activity in May, the 18th month of contraction in 19 months, and indications of weaker hiring growth has boosted odds the Fed will begin cutting its target rate later in 2024, which would spur car sales. Sales of light trucks rose to a 12.8mn unit rate in May from a 12.74mn rate in April, while car sales were little changed at a 3mn unit rate sequentially. Domestic auto production dropped to a seasonally adjusted rate of 122,600 in April — the lowest level since September 2021 — from 150,600 in March. Auto assemblies are reported with a one-month lag to sales. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Gerdau resumes steelmaking after Brazil floods


04/06/24
04/06/24

Gerdau resumes steelmaking after Brazil floods

Sao Paulo, 4 June (Argus) — Brazilian steelmaker Gerdau resumed operations in southern Brazil, weeks after heavy rains flooded and paralyzed industry in the region. The company said in early May it was temporarily halting operations at its facilities in the state of Rio Grande do Sul until it could ensure "people's protection and safety." The company did not specify when it resumed operations, but it told Argus it did not have production losses due to the suspension. At the time, the region was facing flooding rains that killed at least 172 people and forced thousands to abandon their homes. Gerdau produces steel at its Riograndense and Charqueadas mills. The company did not give further details on produced volumes by states, but it sold 2.7mn metric tonnes (t) of steel in the first quarter, down from 2.98mn t a year earlier. The Charqueadas mill produces special steel products, while the Riograndense mill produces raw and finished steel products such as rebar and wire rod. By Carolina Pulice Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

India’s Mn alloy prices surge on high ore prices


04/06/24
04/06/24

India’s Mn alloy prices surge on high ore prices

Mumbai, 4 June (Argus) — Manganese alloy prices in India have soared in response to increased prices for imported ore and domestic ore from state-owned mining company Moil for June shipment. Domestic prices for 65-70pc grade ferro-manganese were assessed at Rs94,000-96,000/t ex-works today, up from Rs90,000-92,000/t on 30 May, while prices for 70-75pc grade alloy rose to Rs98,000-100,000/t ex-works from Rs93,000-95,000/t. Domestic prices for 60pc grade silicon-manganese were assessed at Rs92,000-94,000/t ex-works today, up from Rs84,000-86,000/t on 30 May. Moil lifted manganese ore prices substantially for June shipment in its latest tender — by 35pc on the month for ore with 44pc and above manganese content and by 30pc for ore with manganese content below 44pc, as well as 25pc and 30pc silico-grade ore and fines. These hikes have pushed manganese alloy prices in India to their highest since June 2022. Indian alloy producers have responded to the rising ore prices and limited raw material availability by raising offers, despite bearish spot demand. Buyers have become cautious, with some adopting a wait-and-watch approach. "Market participants have yet to accept the hike in prices as only a few small transactions have happened, and major bulk deals are yet to conclude [at the higher levels]," a producer said. By Deepika Singh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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