Note-- All in combat on this next round of pollution curbs per the government as announced Tuesday. Number of cities drawn into the plan now to over 80.

It appears we have seen the top in volumes in these commodities consumed in China for now if these targets are held to.

Also formalized target of 2m EV vehicle units per annum domestic production capacity by 2020.  (Note—current monthly EV production rate in China is circa 50,000 units.  I commented on the spike in output in the June number to 60,000 units a few days ago.  The target means production is to rise another 200% in just two years.  That also means the share of battery raw materials in the demand mix use for graphite, Li, Co, Mn, Ni as imports into China of those commodities also have to rise near that amount).

Implication is that even if the Rest-of-World economic activity and trade may turn negative due to trade frictions with the USA, this battery raw materials sub-sector of the mining industry will buck that trend in a notable way.  Look for battery order growth among the Chinese firms and their suppliers in H2 2018 as confirmation.


Paul Renken, Senior Geologist and Mining Analyst 14 June 2018

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