Lithium hydroxide: mismatch between supply and demand, skyrocketing has "lithium"

Editor's note: In the past 2022, the domestic chemical products market as a whole showed a rational downward trend
.
According to the statistics of business agencies, in 2022, among the 106 mainstream chemical products it monitored, 64% of the products fell and 36% rose, and the chemical product market showed a pattern
of rising new energy categories, falling traditional chemicals, and stabilizing basic raw materials.
In the "2022 Chemical Market Review" series of reports launched in this edition, the products with the highest rise and fall will be selected for analysis
.

2022 is undoubtedly the highlight of
the lithium salt market.
Lithium hydroxide, lithium carbonate, lithium iron phosphate and phosphate ore respectively occupy the top 4 seats
in the list of chemical products.
In particular, the lithium hydroxide market was mainly based on a strong rise and a high sideways intertwined throughout the year, and finally ranked first
with an annual increase of 155.
38%.

Two rounds of strong rally to new highs

The lithium hydroxide market trend in 2022 can be divided into three stages
.
At the beginning of 2022, the lithium hydroxide market opened at an average price of 216,700 yuan (ton price, the same below), and after a strong rise in the first quarter, it maintained a high and firm operation in the second and third quarters, and rose rapidly again in the fourth quarter, and finally ended with an average price of 553,300 yuan, an annual increase of 155.
38%

In the first quarter of 2022, the quarterly increase of the lithium hydroxide market reached 110.
77%, of which February was the largest increase in the whole year, reaching 52.
73%.

According to the statistics of the business agency, supported by upstream ore at this stage, the price of lithium carbonate has continued to rise, forming a strong cost support
for lithium hydroxide.
At the same time, due to the shortage of raw materials, the overall operating rate of lithium hydroxide fell to about 60%, and the supply side was tight
.
The downstream high-nickel ternary battery manufacturers have increased their demand for lithium hydroxide, and the mismatch between supply and demand has promoted the price of lithium hydroxide to rise
strongly.

In the second and third quarters of 2022, the lithium hydroxide market showed a high volatility, with the average price increasing slightly by 0.
63%
during this cycle.
In April ~ May 2022, the lithium carbonate market weakened, some lithium hydroxide manufacturers released new production capacity, the overall supply increased, the domestic downstream spot procurement demand slowed down, and the lithium hydroxide market loosened
at a high level.
Since June 2022, the price of lithium carbonate has been slightly raised, supporting the lithium hydroxide market, while the enthusiasm of downstream inquiries has increased slightly, and the price of lithium hydroxide has risen steadily, and the overall trend is high and volatile, until the average price reached 481,700 yuan
on September 30.

Entering the fourth quarter of 2022, the lithium hydroxide market rose again, with a quarterly increase of 14.
88%.

In the atmosphere of peak season, the production and sales of terminal new energy vehicles have increased significantly, and the market is difficult to find
.
Coupled with the end of the new energy subsidy policy, some car companies have stocked up in advance, and the strong demand for energy batteries has driven the lithium hydroxide market
.
At the same time, affected by the domestic epidemic, the market spot supply is tight, and the lithium hydroxide market is rising again
.
After mid-November 2022, the price of lithium carbonate fell, and the lithium hydroxide market fell slightly, and the final price closed at 553,300 yuan
.

Upstream raw material shortages and tight supply

Looking back on 2022, not only the lithium hydroxide market is rising, but other lithium salt series products have performed well
.
The annual increase of lithium carbonate reached 89.
47%, the annual increase of lithium iron phosphate reached 58.
1%, and the annual increase of upstream phosphate ore of lithium iron phosphate also reached 53.
94%, these three products ranked second, fourth and fifth in the list of chemical product gainers
.
Industry insiders believe that the main reason for the surge in lithium salt in 2022 is that the cost of lithium resources continues to rise, resulting in an increasing shortage of lithium salt, thereby pushing up the price of
lithium salt.

According to a new energy battery marketer in Liaoning, lithium hydroxide is mainly divided into two production routes of spodumene to produce lithium hydroxide and salt lake to produce lithium hydroxide, spodumene can directly produce lithium hydroxide, salt lake needs to produce industrial grade lithium carbonate before producing lithium
hydroxide.
In 2022, companies using spodumene to produce lithium hydroxide are subject to tight
mineral resources.
On the one hand, under the pattern of tight supply of lithium resources, lithium hydroxide production capacity is limited
.
On the other hand, there are only a handful of lithium hydroxide producers certified by international battery leaders, so the supply of high-end lithium hydroxide is even more limited
.

Chen Xiao, an analyst at Ping An Securities, pointed out in the research report that the raw material problem is an important disturbance factor
in the lithium battery industry chain.
For the salt lake brine lithium extraction route, due to the cooler weather led to reduced evaporation in the salt lake, there was a shortage of supply, especially in the first and fourth
quarters.
Another upstream phosphate ore of lithium iron phosphate due to the scarce resource properties, resulting in insufficient spot supply, promoted the market to run at a high level, with an annual increase of 53.
94%.

Terminal new energy demand has increased

As a key raw material for high-nickel ternary lithium-ion batteries, the strong growth of downstream new energy vehicle industry demand has provided a source of impetus
for the rise in lithium hydroxide prices.

Ping An Securities pointed out that the new energy terminal market will continue to be strong in 2022, and its performance will still be bright
.
Lithium hydroxide downstream battery plant production is active, and the demand for high-nickel ternary batteries and lithium iron continues to improve
.
According to the latest data from the China Association of Automobile Manufacturers, in January ~ November 2022, the production and sales of new energy vehicles were 6.
253 million units and 6.
067 million units, respectively, an increase of 1 times year-on-year, and the market share reached 25%.

In the context of tight resources and strong demand, the price of lithium salt such as lithium hydroxide has soared, and the lithium battery industry chain has fallen into "anxiety", whether it is power battery material suppliers, manufacturers, or new energy vehicle manufacturers are stepping up to buy lithium salt
.
In 2022, a number of battery material manufacturers signed supply contracts
with lithium hydroxide suppliers.
A wholly-owned subsidiary of Yahua Group signed a supply contract with AIXKAI for the supply of battery-grade lithium hydroxide; AIXKAI also signed contracts for battery-grade lithium hydroxide products with Tianyi Lithium and Sichuan Tianhua
, subsidiaries of Tianhua Chaojing.

In addition to battery companies, car companies are also actively competing for lithium hydroxide supplies
.
In 2022, it is reported that Mercedes-Benz, BMW, General Motors and other automobile companies have signed battery-grade lithium hydroxide supply agreements, and Tesla has said that it will build a battery-grade lithium hydroxide chemical plant and directly enter the field of
lithium chemical production.

On the whole, the booming development prospects of the new energy vehicle industry have brought huge market demand for lithium hydroxide, and the tight supply of upstream lithium resources has led to limited lithium hydroxide production capacity, pushing its market price to soar to a high level
.