L R AS Published on Monday 14 March 2022 - n° 397 - Categories:battery materials

The price of lithium carbonate has soared and become too expensive

The price of lithium carbonate used in ternary and lithium iron phosphate (LFP) batteries has risen by 60% since the beginning of the year, hitting the ceiling for many lithium battery manufacturers.

According to Chinese battery manufacturers, the price hikes were triggered

by storage and media hype. In reality, the increase in demand for car batteries is leading to a reduction in lithium carbonate and a much higher price than expected: the price of a metric ton of lithium carbonate was RMB 50,500 at the beginning of 2021. By the beginning of 2022, it had risen to RMB 300,000, a six-fold increase in one year. Despite efforts to rapidly expand lithium battery production, the problem of mining supply is difficult to solve in the short term. The price of lithium carbonate recently exceeded RMB 500,000 per metric ton; a seasonal increase of over 60%. Between the beginning of 2021 and now, the price of lithium carbonate has increased almost tenfold.

Major manufacturers have stated that they will stop buying lithium from a price level of RMB 470,000. It is not known whether they have carried out their threat. If they did, they risk losing their large customers to smaller manufacturers who do not carry out the boycott. Moreover, with a large number of players in the lithium battery sector, not having materials is tantamount to not surviving. Given the long-term competition, a collective boycott would be difficult.

Rising material prices have continually eroded the profits of lithium battery manufacturers. Tier 1 factories can wait for Tier 2 and Tier 3 factories to suspend production to reduce their losses, and then renegotiate prices with the materials factories.

The Chinese authorities have indicated that they will accelerate the development of lithium and nickel resources in China, and improve the recycling system by increasing the recycling rate and resource utilisation. However, the establishment of new lithium salt production units in China could not yet produce in 2022. The imbalance between supply and demand for lithium carbonate is expected to persist throughout the year and prices are expected to continue to rise until mid-year.


Digitimes of 9 March 2022

Editor's note: This deadlocked situation with insufficient production of an essential material for batteries (the same would be true of silicon) stems from the desire to move very quickly from a fossil-based economy to one based on electricity and renewable energy. As the whole world or even half the world wants to get solar panels, electric vehicles, semiconductors... at any cost, production does not follow, especially if rare materials are used.

This is only the beginning of the rediscovery of scarcity in economics

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