BATTERY MATERIALS CONF: Seven things we learned about the lithium market

There were seven main points for participants in the lithium market to take away from the Battery Materials 2019 Conference, hosted by Fastmarkets in Shanghai on April 10-12 this year.

1. Lithium prices will remain under pressure for most of 2019
Lithium prices will remain under pressure due to increasing supply.

There were new projects able to produce battery-grade lithium carbonate and hydroxide in China, and producers and consumers in the region expected that supply volumes will exceed demand throughout 2019. They forecast weaker prices in the months to come.

2. Chinese lithium spot price is the world’s benchmark
Asian delegates at Batteries 19 agreed that lithium spot prices in China influenced the rest of the world’s lithium contract prices, emphasizing that the only reason for contract price movement across the world was the price volatility in China.

The East Asian country was the world’s largest consumer and producer of lithium compounds.

“The influence of the Chinese spot lithium prices across the world has been evident due to the rapid increase in lithium supply from China to the rest of world in recent years,” Zhou Jianqi, general manager of Yahua Lithium, said during the keynote panel session.

China’s rapidly growing consumption of lithium spodumene as a raw material meant that the country was set to become the biggest supplier in the global market for lithium compounds.

The vast majority of global spodumene production was sold to China and processed into lithium carbonate and hydroxide.

In 2018, global spodumene production totaled 191,050 tonnes of lithium carbonate equivalent (LCE), compared with 148,400 tonnes of LCE produced from brine in the same year, according to Fastmarkets’ research team.

China was also an important producer of lithium compounds from brine.

3. Chinese lithium compounds quality demystified
Not all lithium producers in China were able to produce lithium compounds that were suitable for the battery industry, but an important number of Chinese producers were currently suppliers to the sector.

Most of new and current lithium producers in China have added, or plan to add, lithium production capacity specifically to supply the battery industry in 2019. This was a fast-growing trend and was likely to increase the importance of Chinese producers as suppliers of lithium compounds to the battery industry.

4. More lithium produced from brine
Producing battery-grade lithium compounds from brine in the Chinese domestic market remained a growing trend, with such material sold at a discounted price compared with lithium compounds produced from spodumene.

The higher production costs associated with production from spodumene remained the principal factor behind this trend.

“The quality of material produced from brine is also very good, and it can be used in our production of cathode material. However, if the lithium market keeps falling, material produced from spodumene will face price pressures due to the associated higher production costs,” one delegate said.

5. Lithium compounds from brine vs hard rock
Despite the higher production costs, lithium compounds produced from hard rock were seen in China as the better option.

The consistent quality of the lithium carbonate and hydroxide produced from hard rock, as well as the lower proportions of unwanted impurities such as boron and magnesium, were said by lithium producers at the conference to be the two main advantages of lithium compounds produced from hard rock.

Additional benefits from hard rock mining were said to be the faster ramping-up of production from mines compared with brine operations, and also that they were less affected by adverse weather conditions such as rain and snow.

Having said that, conference delegates agreed that brine and hard rock were likely to continue to coexist as sources of raw material for lithium chemical compounds.

6. Lithium hydroxide demand to grow
China’s 2019 new energy vehicle (NEV) subsidies prioritize longer driving range and higher energy density. This was making most battery producers increase their efforts to adopt higher nickel-content NMC (nickel, manganese, cobalt) cathode batteries, to increase batteries’ energy density and lifespan, and the available driving range.

Higher nickel-content NMC cathode batteries, such as NMC 622 and 811, typically consume more lithium hydroxide, so demand for lithium hydroxide was expected to keep rising.

“Demand for lithium hydroxide is expected to exceed lithium carbonate demand, supported by the development of high-nickel content batteries,” a lithium producer told Fastmarkets.

Although demand for lithium hydroxide was likely to increase, lithium carbonate was set to remain the most widely used lithium compound in batteries over the next couple of years, producers and consumers of lithium told Fastmarkets. But this would depend on how fast higher nickel-content batteries were adopted.

7. Growing micronized lithium hydroxide trend
While demand for lithium hydroxide was set to rise, lithium hydroxide producers in China were focused on increasing their output of micronized lithium hydroxide.

Lithium producers said that this type of material was favored by producers of higher nickel-content batteries, because it was easier to use and gave higher performance.

Although this was a growing trend, not all lithium producer in China were currently able to produce such material.

The higher costs associated with the micronization of lithium hydroxide, as well as its toxicity and the resulting handling problems, were barriers for some lithium producers in China.
 
Stay up to date with the lithium market and key battery-grade prices with our weekly Lithium Price Spotlight.

 

Martim Facada

martim.facada@fastmarkets.com

Carrie Shi

Carrie.shi@fastmarkets.com

Published

Martim Facada

Carrie Shi

April 15, 2019

15:38 GMT

Shanghai, London