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Battery makers and new energy vehicle (NEV) manufacturers seek lower lithium prices, multi-year commitments The world’s largest consumers of lithium compounds, such as battery makers and NEV manufacturers, want lower and stable lithium prices. After the shortening of contractual periods to a single year after the lithium demand shock at the end of 2015, battery makers and NEV manufacturers are now looking to sign supply contracts for five or more years with multiple suppliers to ensure consistent delivery at lower prices.
Lithium producers agree that shortage of lithium battery-grade compounds is here to stay The world’s largest lithium producers agree that the shortage of lithium battery-grade compounds will endure both in 2018 and in the years to come. Despite additional lithium units from Australian hard rock and expansions in brine production, supply has been overestimated and demand underestimated over the past 10 years.
Most of the new production is struggling to meet the battery-grade specifications for cathode and battery makers, lithium producers said, making talk of a supply surplus a misleading concept. Still, change may be coming: The likes of Panasonic and other lithium converters are looking to assist producers in their attempts to provide battery-grade quality material.
Lithium carbonate to remain important despite battery manufacturers’ preference for lithium hydroxide Lithium hydroxide usage in the battery sector is growing due to its application in next generation cathode-batteries such as NMC 622, NMC 811 and NCA +. But lithium carbonate compounds will remain very important both to battery and to non-battery industries due to its usage in several batteries such as LFP, LCO or NMC 111 while raw lithium hydroxide has non-battery applications, lithium producers agreed.
DSO moving from Australia to China How successful the conversion of Australian Direct shipping ore (DSO) (min 1-1.5% Li2O) in China has been remains a burning question for the lithium industry. Some lithium producers and consumers maintain the conversion of DSO into battery-grade lithium units in China has run into obstacles.
In any case, producers and consumers outside China see DSO conversion as a short-term phenomenon due to the unsustainability of shipping rock with low lithium content, the technological challenge of converting it at efficient rates and the large amounts of waste generated from this process.
Lithium a specialty chemical, not a commodity Most lithium producers in attendance qualified lithium compounds as specialty chemicals rather than as commodities – a marked difference from how investors perceive the material.
These specialty chemicals, especially the battery-grade compounds, must undergo a long and arduous process before being qualified for use by battery makers, the former argue.
Skepticism about lithium indexation but support for the need for a new pricing mechanism Lithium producers at the conference remained skeptical about lithium indexation – price negotiations remain a one-to-one process in an industry that takes its guidance usually from import/export data alongside internal sales figures by the different producers.
But junior producers and investors are supportive of a new price mechanism to hedge their risk and to lock in investment for their projects. Carmakers and battery producers also support this idea due to the need for price transparency and because of their desire to secure lower and stable prices for longer contractual periods.
Learn more about Metal Bulletin’s lithium price spotlight here.
All lithium carbonate, hydroxide and spodumene prices are available in our Battery Raw Materials Market Tracker. Get a sample of the report here.