Recent Performance and Forecast of Lithium Industry
Click:0    DateTime:Nov.11,2020

By Wu Na and Zhou Yue, China Inorganic Salts Industry Association

Overview of domestic lithium resources

China’s lithium resources are mainly distributed in Qinghai (58.15%), Tibet (22.39%), Sichuan (9.8%), Jiangxi (5.7%), Xinjiang and Hunan. Around 80.54% of lithium resources extracted from salt lakes are from Qinghai (18.16 million tons) and northwest of Tibet. Lithium content of 11 sulfate-type salt lakes in Qaidam Basin reaches industrial grade of 150 mg/L. Lithium chloride in Tibet totals 17.38 million tons, and lithium content of Tibet’s 80 salt lakes including over eight large ones reaches cut-off and industrial grades.

Output of domestic lithium salt

   Domestic output of lithium carbonate was up 31.8% YoY to 159 000 tons in 2019. Of the total, 21.4% was from salt lakes and 78.6% from ores. Lithium carbonate output reached 70 990 tons in the first half of 2020. In the first two months, the Spring Festival and outbreak of the coronavirus decreased the output, hitting the lowest of 6 400 tons in February. With enterprises resuming production, the output skyrocketed 107.81% MoM to 13 300 tons in March, grew 4.51% MoM to 13 900 tons in April, and then tended to stabilize, reaching 13 840 tons in May and 13 250 tons in June.

Prices of lithium salt

   Prices of battery-grade lithium carbonate have hovered at RMB40 000/t during 2010-September 2015, and propelled by rising ore prices and explosive growth of new energy vehicles, have been increasing since October 2015 to nearly RMB180 000/t at the end of May 2016. Jump of lithium prices was mainly driven by two factors: global output decrease because of El Nino and release of electric vehicle capacity.
   However, increasing prices resulted in a glut. This made prices of battery-grade lithium carbonate fall from RMB160 000/t to around RMB80 000/t in 2018 and to around RMB50 000/t in December 2019, when price difference between lithium hydroxide with a similar price trend and lithium carbonate shrank to RMB5 000-8 000/t.
   In the first half of 2020, lithium carbonate prices declined continually owing to the coronavirus. More specifically, prices of industry-grade lithium carbonate decreased 16.76% from RMB43 250/t in January to RMB36 000/t in June (battery grade, down 16.16% from RMB50 750/t to RMB42 550/t). Lithium hydroxide prices declined 6.98% from RMB58 750/t in January to RMB54 650/t in June.

Foreign trade of lithium salt

   Import volume of lithium carbonate soared 109.3% YoY from 7 854.55 tons to 16 437.58 tons in the first five months of 2020, while export volume was down 48.6% YoY from 6 490.22 tons to 3 336.21 tons.
   China imported 219.92 tons of lithium hydroxide during the same period, down 35.5% YoY from 341.14 tons. Exports were up 31.3% YoY from 16 164.5 tons to 21 229.99 tons.
   As for lithium chloride, 207.51 tons were imported in the first five months, a decrease of 79.3% YoY compared with 1 003.59 tons last year. Export volume was 109.21 tons, up 43.2% YoY from 76.27 tons. Foreign trade value of basic lithium salt approached to US$370 million in the first five months of 2020.

Forecast of domestic demand for lithium salt

   Fast-growing new energy vehicle and energy storage industries heated up consumption of lithium salt in recent years. However, these industries are impacted by recent coronavirus. Hence decrease in demand for lithium salt. But in the long term, they will continue to promote the lithium industry given their rapid development. Power batteries will remain a main growth driver of downstream demand for lithium products, especially lithium hydroxide, which is expected to become a mainstream lithium product attributable to high-nickel trend of power batteries, etc.
   Western countries will issue more policies to support their electric vehicle industries, driving up the world’s demand for lithium salt. Intermittent short supply will be possible. But in the next one or two years, the lithium industry will remain in the grip of a glut, and prices will rebound after falling to low points. The world’s demand for lithium carbonate will reach 500 000-800 000 tons.

Related policies

   China extends policies regarding purchase subsidies and exemption of purchase taxes for two years to support new energy vehicle industry. Subsidy policies will be more detailed. In addition, the government calls for innovating NEVs used in public fields and improving related infrastructures. Local departments are encouraged to facilitate use of NEVs via measures like parking discounts.
   While upgrading technologies to reduce production costs and achieve price advantage, lithium salt producers are required to improve product quality and propel R&D of new products to strengthen their competitiveness.
   The government will standardize recycling of waste batteries, power batteries in particular. Enterprises superior in disposing waste power batteries will be included in a “white list”, a measure China takes to reduce related pollution.