Tight Supplies and Active Purchases Continue to Send Lithium Hydroxide Prices to Record Highs in China

Tight spot availability and robust demand are continuously pushing up the Lithium Hydroxide Prices curve in the global markets. Battery grade Lithium salts are on a bullish run since the start of this year as the industry shift gears on resurgent demand for electric vehicles. Battery Grade Lithium Hydroxide Monohydrate has crossed USD 30 per kg mark CIF China while Lithium Carbonate has increased by four folds since the start of 2021 to surpass $36 per kg levels in December.

The price situation seems not in favour of the Chinese and key battery makers worldwide who have been facing the brunt of acute surges in the raw material pricing due to lack of available supplies. As per market players, Lithium prices are likely to remain strong going into 2022 due to an imbalanced demand-supply situation. With several new Chinese entrants venturing into the Lithium markets, the Lithium Hydroxide market is likely to witness phenomenal gains in the coming year. Several automotive  manufacturers are rushing to secure their long-term supply contracts to maintain the safety and stability of the industry chain. Electric vehicle sales in China are crossing records each month with year-to-date sales figure crossing 3 million units, up by about 177% compared to the same period last year.

Recently, Ganfeng Lithium and its wholly owned subsidiary GFL International Co., Limited signed a product supply contract with Tesla, Inc. and Tesla (Shanghai) Co., Ltd. for a 3-year supply of battery-grade lithium hydroxide products to Tesla. The duration of the contract is from 1 January 2022 to 31 December 2024. The deal was signed after CIF Asian Lithium Hydroxide prices reported a whopping  increase in November. 

Several Chinese metal producers are also expanding their footholds in the Lithium chemical industry. Early in December, Sichuan New Energy Power Co. Ltd. entered into a strategic agreement with Chinese Cobalt Huayou Holding, parent of Zhejiang Huayou Cobalt, where the partners will collaborate to producing lithium chemicals, and focus on acquisition and development of important mineral resources at home and abroad.

As per ChemAnalyst, Chinese Lithium buyers are expected report strong earnings despite increasing pressure of rising costs. Strong demand from the electric vehicles market as government bodies incentivize the energy transition will continue to maintain a high market growth rate in the coming years.