Lithium hydroxide prices remained stable, demand-supply structure may improve next year on rising demand

SHANGHAI, Nov 24 (SMM)—Battery-grade lithium hydroxide prices in China have been falling since the start of H2 on stable demand but rising supply, down about 12% from early 2020. Compared with lithium carbonate, lithium hydroxide prices remained above cost lines, but some lithium salts producers are pessimistic about battery-grade lithium hydroxide prices in 2020.

An SMM survey showed low-end traded prices of battery-grade lithium hydroxide of some plants stood at 45,000 yuan/mt, with a few makers reducing prices to 43,000-44,000 yuan/mt to close deals. Meanwhile, large-scale producers saw relatively strong sales and intended to slightly raise lithium hydroxide prices as battery-grade lithium carbonate increased steadily, but demand that failed to rise significantly has kept prices stable.

Rising market supply resulted in high inventories

As new capacities have been brought into operation, supply of lithium hydroxide has rose sharply in the second half of this year. However, it takes approximately a half year to certify lithium hydroxide products, and this led to buildup of high inventories.

Demand-supply structure may improve as demand likely to increase in the long run  

SMM learned that lithium salts plants are bullish on demand for lithium hydroxide in the future, especially demand from overseas markets by 2022, and some of them believe that its prices are likely to increase to 60,000-70,000 yuan/mt by then, with a reasonable price spread of 10,000 yuan/mt with battery-grade lithium carbonate.

Demand for high-nickel batteries is expected to rise sharply in the near term as output and sales of new energy vehicles (NEVs) continue to grow. Demand for lithium hydroxide is likely to increase by about 40,000 mt in 2021 from high-nickel battery producers overseas and rise by about 90,000 mt from domestic producers, an SMM survey showed.