Rising Competition Puts Pressure on Global Lithium Fluoride Prices

Lithium Fluoride is a precursor of Lithium Hexafluorophosphate, a crucial specialty chemical used in the production of Lithium-ion batteries and other electronics. The outlook for global demand has worsened and could have an impact on global growth, reducing the demand for goods and services from other nations due to uncertain economic conditions and expected reductions in investments and spendings in the US and Europe because of rising interest rates.

The prices of Lithium Fluoride in the US market slid down by 15% to USD 122240 per tonne in March from USD 143868 per tonne due to a lack of market competitiveness from the Asian market, especially China.

Overregulation, slow permitting process, and high costs for most manufacturing input elements are all affecting Europe's competitiveness, and the overall economy of the European Union (EU) is under pressure.

The EU recently revealed its Critical Raw Materials Act to significantly improve domestic recycling, extraction, and processing capacities for metals such as Lithium and other rare earth metals, specifically Lithium Fluoride and Lithium Carbonate, major raw materials for EV-battery manufacturing. Following the USA's push for electrification and with the Inflation Reduction Act, other countries are also debating how to benefit from the expanding market.

The Act emphasizes boosting production and reducing dependence on any other country. For many of the imports of chemicals and Lithium salts like Lithium Fluoride used in Europe, China currently dominates the supply chain.

The EU is also lagging behind the US, which has already made significant investments in producing key metals and lithium salts such as Lithium Fluoride under the rules of the Inflation Reduction Act.

While in China, Lithium Fluoride prices plummeted by nearly 6% from USD 124538 per tonne in January to USD 116550 per tonne in March due to the piling up of Lithium Fluoride stocks in the region as the demand slumps after the government cut EV subsidies. This year is attributed to wait-to-see consumer sentiments. The Chinese EV market players are slashing prices to clear inventories that do not meet the new standards, as the SAIC Volkswagen Automotive and Geely Automobiles have already cut prices to meet the new and stricter emission rules taking effect on 1 July 2023.

According to the market participants, the presumed prices of Lithium salts such as Lithium Fluoride and Lithium Hexafluorophosphate might dip further amidst uncertain market conditions and rising competitiveness globally.