Analysis about influence of PHEIC on import and export of Chinese lithium products 02-18-2020

Summary: The announcement of PHEIC may have an impact on import and export of Chinese lithium products, and may slow down the benign processing of raw material at all levels. 

On 31 Jan., 2020, the World Health Organization (WHO) declared China’s Corona Virus Disease 19 (COVID-19, named by the WHO on 11 Feb.) as a Public Health Emergency of International Concern (PHEIC). Although the WHO has explicitly stated that other countries were not recommended to restrict transport or trade with China, nor completely isolate China. However, the declare of PHEIC indeed results in a certain impact on China, as you can see, fewer flights between China and other countries or regions, foreign restrictions on the entry of Chinese citizens. It is not difficult to imagine that this will also affect Chinese enterprises to carry out overseas project contracting and China’s import and export. No exception for the import and export of lithium products.

The author holds that the PHEIC has a more direct influence on the export of lithium products, while the import will be indirectly affected. The key is that PHEIC is likely to temporarily slow down the benign processing of raw materials at all levels between import and export of Chinese lithium products, thus resulting in a series of impacts. Generally, Chinese traders import a large number of lithium ores from abroad, which will be processed by Li-ion battery related enterprises, forming all levels of lithium products for domestic consumption and export. The declaration as PHEIC will prompt other countries or regions to adjust their imports from China in the short term, directly limiting the export volume of Chinese lithium processed products. 

Meanwhile, the epidemic has seriously affected domestic production. The depressed demand will eventually lead to a reduction in imports of lithium ore, and domestically low operation will not be able to produce enough lithium processed products to meet domestic consumption and export. Therefore, whether to restore production in time becomes the key for an enterprise or even an industry to effectively stop loss. Starting on 10 Feb., we can see the large-scale work resumption of lithium related enterprises at all levels, and the total capacity is in the rising stage, which would continue to rise higher until restoring to the general level, if the COVID-19 hadn’t gotten worse. Besides, not ruling out the possibility of going beyond the general level of the same period, it is, to some extent, a sign that companies are desperately trying to save themselves, and that downstream demand is strongly released. 

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