Warming up of Ternary Materials Triggers Booming Expansion of Lithium Hydroxide

By Li Bingxin, China Nonferrous Metals Industry Association

In 2016, the average price of industrial-grade lithium carbonate was RMB125 000/t, an increase of 162% over the previous year. The average price of battery-grade lithium carbonate was RMB147 400/t, an increase of 160%. The average price of lithium hydroxide was RMB154 400/t, an increase of 208%. Table 1 shows the details. Pushed by demand in the lithium battery sector, lithium hydroxide prices grew much faster than lithium carbonate prices. Figure 1 shows the price trend of lithium salts.

Table 1   Lithium salt prices, 2016 (RMB/t)

    Average price, 2016    YoY growth    2016 peak    Growth over the low point at the beginning of 2015
Industrial-grade lithium carbonate    125 000    162%    147 000    297%
Battery-grade lithium carbonate    147 000    160%    178 000    324%
Lithium hydroxide    154 000    208%    175 000    327%
Lithium chloride    120 000    162%    144 000    279%
Lithium metal    730 000    80%    840 000    129%


Ninety percent to be consumed in making lithium batteries

Lithium hydroxide is one of the most important lithium salts, having many applications. It is used mainly as a chemical raw material or chemical reagent, and heavily used in the lithium battery, petroleum, metallurgical, glass and ceramic sectors. “New-energy vehicles” have driven adrastic demand increase, changing the overall consumption pattern. Earlier, the principal application in China was in making lubricating grease, accounting for 80% of national consumption in 1990. That proportion shrank constantly afterwards, and had already dropped to 30% by 2016. Meanwhile, consumption in the lithium battery sector increased constantly, taking up 60% in 2016, and is expected to reach 90% this year.
When lithium hydroxide is used as the lithium source, high-nickel ternary materials have higher energy density and better charging/discharging behavior. The manufacture of many high-nickel ternary materials such as NCM (nickel/cobalt/manganese) 811 and NCA (nickel/cobalt/aluminum) uses lithium hydroxide. Manufacturers of new-energy vehicles that have high energy density get bigger government subsidies. High-nickel ternary lithium batteries have therefore won wide acceptance and will quickly promote the demand for lithium hydroxide.

Demand growth of ternary materials will accelerate

The main applications of battery-grade lithium hydroxide in China today are in making lithium ferric phosphate (LFP) and lithium titanate. Only 2% of the demand for battery-grade lithium hydroxide originates in making high-nickel NCM and NCA.
The output and sales of new-energy vehicles have increased drastically this year. Both reached 18 000 units in February, increasing 15.5% and 30.3% respectively over the same period of last year. Output of new-energy vehicles is expected to reach 790 000 pieces this year.
The 2017 output of ternary lithium batteries will be 110-120% higher than last year. The proportion of high-nickel ternary materials in batteries will increase steadily. Last year, NCM 622 and NCA ternary materials accounted for 15% of the total output, and they are expected to exceed 20% this year.
In the next five years, average annual output growth will be 18% for LFP and 68% for NCM, implying robust growth of lithium hydroxide consumption. Table 2 shows the details.

Table 2   Demand for LFP & NCM for making power lithium batteries in China, 2015-2020 (kt)

Item    2015    2016    2017    2018    2019    2020
Output of new-energy vehicles     379    517    791    1 037     1 336     1 935
LFP    30    45    58    61    67    86
YoY growth (%)    -    50.0    29.0    5.0    10.0    28.0
NCM    9    17    32    53    83    135
YoY growth (%)    -    89.0    88.0    66.0    57.0    63.0


Risk of supply surplus is aggravated

The growth of lithium hydroxide output in China was quite limited in 2016, and output was 25kt. Figure 2 shows the details.
Encouraged by optimistic forecasts, domestic and foreign enterprises have started a new round of capacity construction, with commissioning planned mainly for 2019-2020. Table 3 shows the capacity expansion plans of major enterprises.
Global lithium hydroxide demand is expected to grow 25% annually in the next five years, increasing from 47kt in 2016 to 114.6kt in 2020. In the years before 2020, most of the planned new capacity will still be under construction, so the market is likely to be in short supply. The startups after 2020 pose a risk of surplus. Moreover, development of spodumene resources around the world will become an important factor in the implementation of any new lithium hydroxide capacity.     

Table 3   Capacity expansion plans of major enterprises

Enterprise    Capacity expansion plan
FMC
    Lithium hydroxide capacity will be expanded by 20kt/a in three phases during 2017-2019, bringing total capacity to 30kt/a. The company plans to launch construction of the first phase in the middle of 2017 and complete the construction of all the three phases in 2019.
Sichuan Tianqi Lithium Industries Inc.    A feasibility study of a first-phase lithium product capacity expansion project “20kt/a battery-grade lithium hydroxide” will be launched. A construction plan for a 24kt/a battery-grade lithium hydroxide monohydrate project will be prepared. The project will be located in western Australia, and construction will take 25 months. Completion and trial production are expected in October 2018.
Jiangxi Ganfeng Lithium Co., Ltd.    The company plans to construct a 20kt/a lithium hydroxide monohydrate project in Mahong Plant Compound with equity capital of RMB302.80 million. Battery-grade capacity will be 15kt/a, and industrial-grade capacity will be 5kt/a. Construction requires 1.5 years.
SQM    Lithium hydroxide capacity will be expanded by 7.5kt/a to 13.5kt/a. The project is to be completed in 2017.
Jiangxi Yabao Lithium Co., Ltd.    The existing capacity is 15kt/a. New capacity of 25kt/a will be constructed.
Jiujiang Ronghui Lithium Technology Co., Ltd.    An 8kt/a lithium carbonate plant will be constructed in Jiujiang. The project is to be completed in 2017.
Sichuan Yahua Industrial Group Co., Ltd.    The company has lithium hydroxide capacity of 12kt/a and plans to construct a new lithium hydroxide production line.