Prices of lithium hydroxide to extend declines until 2019 H2

SHANGHAI, Feb 27 (SMM) – Prices of lithium hydroxide in China are expected to extend their declines until the second half of 2019, or even the fourth quarter when demand picks up.

The price spreads with battery-grade lithium carbonate are expected to narrow to 15,000-20,000 yuan/mt.

Battery-grade lithium hydroxide saw prices hold steady at 99,000-112,000 yuan/mt this month, SMM assessments showed. Such a temporary reprieve came after continued declines since October 2018 when prices stood at 125,000-135,000 yuan/mt.

With downstream consumers returning from the Chinese New Year holidays, trades of lithium hydroxide would likely improve, which is set to resume the declines in prices.

Substantial growth in supplies and cheaper lithium carbonate contributed to the losses in prices of lithium hydroxide.

Output of lithium hydroxide in China significantly grew after new capacities came online or reached mass production. In October 2018, output across the nation came in at 5,700 mt, up 32% from a year earlier, SMM data showed.

Lithium carbonate was another factor that led to the falling lithium hydroxide market as price allure of that material diverted demand for lithium hydroxide.

In October, prices of battery-grade lithium carbonate stood close to 50,000 yuan/mt lower than prices of battery-grade lithium hydroxide on the backdrop of stable production of ternary materials.

Lithium hydroxide is mainly used in the production of NCM 523, NCM 622, NCM 811 and NCA. For NCM 523 and 622, lithium carbonate can replace lithium hydroxide as raw materials.

Ternary cathode materials that contain a high content of nickel, such as NCM 811 and NCA are widely expected to be a major consumption driver for lithium hydroxide. Demand from ternary cathode materials with high nickel content is likely to pick up in the second half of 2019, or even the fourth quarter, SMM learned from producers of such materials.