SMM Analysis: High-Cost LiPF6 Producers’ Profitability Has Hit Rock Bottom, When Will LiPF6 Prices Bottom Out?

In 2023, an oversupply of LiPF6 in China led to continuous price declines

In recent years, with the boom in the new energy market, there has been a surge in demand in the LiPF6 industry. Not only have existing companies been continuously expanding their capacity, but new companies are also pouring in. The global LiPF6 capacity reached 115,000 mt in 2021 and doubled to 220,000 mt in 2022, signaling an oversupply. From 2023, as the expanded and newly built capacities come into play, the trend of supply exceeding demand will become even more evident.

According to tracking data from SMM, LiPF6 price began to decline after peaking at around 600,000 yuan/mt in March 2022. By early January 2023, the price had fallen to about 230,000 yuan/mt, and it has now further dropped to around 90,000 yuan/mt, falling below the cost line of many companies.

LiPF6 price trend

LiPF6 price is mainly influenced by the cost of its raw material, lithium carbonate. In the third quarter of 2023, as downstream battery cells continued to pressure the price of upstream raw materials, the falling price of lithium carbonate led to a drop in the price of LiPF6. Besides the lack of support from the price of the upstream raw material lithium carbonate, overcapacity is another key factor causing the decline in LiPF6 price.

Overall, with the continuous decline in the price of the upstream raw material lithium carbonate and no increase in downstream demand, which is mainly just-in-time purchasing, LiPF6 price has been consistently adjusted downwards. SMM predicts a slight recovery in end-user demand in the Q4, which may lead to a short-term rebound in the price of LiPF6. However, the room for increase is limited, as electrolyte factories will also be slightly reducing their inventory in the fourth quarter, leading to a decrease in demand for LiPF6.

In 2023, the LiPF6 industry has begun a deep de-stocking process. The profitability of many high-cost LiPF6 factories has hit rock bottom, leading to a reshuffling of the industry, which favors the leading companies in the existing supply chain. Judging from recent market performance, the rate of decline in LiPF6 price has begun to slow down. Whether the price can bottom out and rebound still depends on the downstream demand and the price trends of upstream lithium fluoride and lithium carbonate.