Will lithium carbonate continue to increase in price?
| Jerry Huang
Let's look at the supply-demand situations of lithium carbonate in order to evaluate its price trends.
Battery-Grade Lithium Carbonate (Li2CO3)
The main demanding areas of battery-grade lithium carbonate are currently from the preparation of NMC ternary cathode materials, lithium cobalt oxide and part of lithium iron phosphate (LFP).
In 2021, the overall growth rate of NMC532 and NMC622 has been low, comparing to Ni-rich ternary materials and LFP. In H2 of 2021, it is estimated that the demand for battery-grade lithium carbonate from production of NMC ternary cathode materials will be approximately 48,470 tons, an increase of only 2.4% from the previous H2 of 2020.
Due to the negative impact of the pandemic, the export volume of China's consumer electronics has decreased significantly, with little increase in its domestic market. The demand for battery grade lithium carbonate from lithium cobalt oxide manufacturers has declined. In H2 of 2021, it is estimated that the lithium carbonate demand from this area will be about 16,737 tons, a decrease of 9.7% from H2 of 2020.
In terms of demand from LFP materials, many mainstream power-type LFP material plants currently use battery-grade lithium carbonate as their main lithium source (accounting for about 30%) to ensure the quality of LFP power battery for EV market. Under the imbalance of supply and demand in the power LFP battery market, enterprises have begun to expand their production capacity largely. In 2021 H2, the demand for battery-grade lithium carbonate from this field is expected to be approximately 14,788 tons, an increase of 30% from H2 of 2020.
Industrial-Grade lithium Carbonate (Li2CO3)
The main demanding area of industrial-grade lithium carbonate are from production of LFP material average quality, lithium manganate, lithium hexafluorophosphate and some traditional industries.
In terms of demand from LFP material production, since H2 of 2020, sales of A00-class EV models have been growing rapidly in China market, resulting heavy demand of average quality power LFP battery. At the same time, some mid-end and high-end models, such as Tesla Model Y and Model 3, have also launched their own LFP-powered versions. Besides, the demand for LFP batteries in the energy storage and two-wheelers market is also increasing. Currently the demand of industrial-grade (including quasi-battery-grade) lithium carbonate from LFP material production accounts for about 70%, comparing to that of battery-grade lithium carbonate. In 2021 H2, the demand for industrial-grade lithium carbonate from this field is expected to be approximately 34,505 tons, an increase of 30% from 2020 H2.
As for demand from lithium manganate production, due to fewer orders of consumer electronics and two-wheelers overseas, the demand of lithium manganate cathode material is not strong. At the same time, as the price of lithium salts continues to rise, manufacturers have great pressure on cost increase and some of them reduced its output. Therefore, the demand for industrial-grade lithium carbonate continues to shrink. There was an obvious output reduction of LMO materials early this year in Spring Festival. In 2021 H2 however, the demand for industrial-grade lithium carbonate from this field is expected to be approximately 11,900 tons, a slight increase of 8% from the previous 2020 H2.
With regard to the demand from preparing lithium hexafluorophosphate, along with the hot sales in the EV market, the domestic electrolyte output has increased significantly, and the demand for lithium hexafluorophosphate (LiPF6) has increased greatly as well. In 2021 H2, it is estimated that the demand for industrial grade lithium carbonate from this area is about 11,236 tons, an increase of 40% from 2020 H2.
The remaining demand for industrial-grade lithium carbonate are from productions of metal lithium, causticizing processed lithium hydroxide and pharmaceuticals, accounted for about 26% of its overall demand, with a slight increase.
In conclusion, the overall demand for lithium carbonate continues to increase rapidly. However the overall output of lithium carbonate is shrinking in 2021 H2 due to decreased supply of spodumene, despite an increased supply from brine sources domestic and overseas. Prices for lithium carbonate are most likely to increase if the above estimates stand correct.