BEIJING, July 8 (Reuters) - China on July 7 announced a number of policy measures to support demand for new energy vehicles, the latest in a string of steps to shore up the country's economic growth that will ultimately benefit metals consumption, industry sources said July 8.
China's Automobile Sector Policy and Market Impact
The notice, which targets the automobile sector, was jointly issued by 17 Chinese ministries and departments including the National Development and Reform Commission, according to a statement published on the website of the Ministry of Commerce.
As part of such policies, China will extend tax exemptions for buying new energy vehicles, promote NEV sales in the countryside, and speed up construction of charging infrastructure.
In addition, China would also take measures to support second-hand car sales and encourage car replacement, the notice said.
China's policies initially had a positive effect on the automobile industry: Incentive measures introduced in May helped China's vehicle sales to bounce back in June after shrinking in previous months due to the pandemic.
According to preliminary statistics released by the China Passenger Car Association July 6, China’s June passenger car retail sales totaled 1.93 million units, representing year-on-year growth of 22% and month-on-month growth of 42%.
Lithium Chemicals
China Association of Automobile Manufacturers had said it was confident China's NEV industry could achieve a sales target of 5 million units in 2022, up 47% from a year earlier.
S&P Global Commodity Insights forecasted 6.4 million EVs will be sold in China, up from double 2021 levels.
With the sales of EVs recovering, demand continues to surge from downstream manufacturers that produce lithium chemicals key for power battery manufacturing, the sources said. This will maintain high prices at home, they said.
But domestic lithium market followed little change in the week to July 8, sources said, adding that demand recovery is still below expectations.
Platts assessed on July 7 battery-grade lithium carbonate at Yuan 470,100/mt ($70,149/mt), delivered, duty-paid China, down Yuan 4,900/mt on the week.
Sources said the markets are still absorbing for term contracts as there is no increase in the downstream demand.
Aluminum
Demand for aluminum from the automobile sector in China is also expected to increase in the latter half of this year, supported by China’s recent policy actions to boost consumption, the sources said.
Aluminum is especially important for China’s auto industry.
Pandemic hurting aluminum markets, weaker downstream demand sets bearish tone for industry.
