Price of Lithium Battery Raw Materials Are Soaring, Demand Exceeds Supply

The price of battery raw materials is "skyrocketing"

At present, affected by the "surge" of upstream raw material prices, power lithium-ion batteries have also ushered in a "price increase". The battery price has risen 4 times in 2021 and will continue to rise in 2022.

Since the beginning of this year, affected by the rising prices of raw materials such as lithium, nickel and cobalt, the prices of cathode materials and electrolytes for power lithium-ion batteries have continued to rise.

The downstream stocking is active, and the price increase is expected to continue.

Lithium carbonate can be used in the manufacture of lithium compounds, enamel and glass. It is the raw material for the preparation of lithium compounds and metal lithium, and can be used as an electrolytic bath additive for aluminum smelting. It is widely used in glass, ceramics, medicine and food industries, and can also be used in synthetic rubber, dyes, semiconductors, televisions, atomic energy, medicine, catalysts, etc. Battery-grade lithium carbonate is mainly used to prepare lithium-ion battery cathode materials such as lithium cobaltate, lithium manganate, ternary materials and lithium iron phosphate.

According to industry analysts, the current market inventory of upstream and downstream raw materials is relatively low, so merchants plan to stock up ahead of schedule. The current supply gap is large, and the supply of lithium salts is particularly tight. The Spring Festival holiday is approaching, which makes the purchasing sentiment in the downstream market relatively positive, and some enterprises have entered the state of raw material reserve. The superimposed market demand gap is still there, and it is expected that the price of lithium carbonate in the short term will still have room for improvement.

Reasons for the rise in battery raw materials

While demand has grown substantially, the supply of raw materials for power lithium batteries is in short supply. Because the global lithium, cobalt, and nickel resources are mainly concentrated overseas and are monopolized by leading mining groups. Since 2020, due to the impact of covid-19 epidemic, the expansion plan of raw material companies has not been completed as expected, resulting in tight raw material imports and tight supply. Power batteries used in new energy vehicles, whether they are lithium iron phosphate or ternary lithium, are all lithium batteries. In traditional lithium batteries, lithium carbonate materials account for a large part of the battery cost. The price of lithium carbonate has been rising. The price of lithium carbonate for power batteries has doubled over the same period last year. In addition to lithium carbonate materials, the prices of other types of lithium battery raw materials are also rising. As the "soul" material for electrolyte production, since the second half of 2021, lithium hexafluorophosphate has been affected by factors such as the mismatch of supply and demand and rising raw material costs, and the domestic price of lithium hexafluorophosphate has continued to rise. In addition to the strong demand for power batteries for new energy vehicles, the tight supply of lithium mineral resources is also an important reason for the continuous increase in the price of lithium battery raw materials.

Future trends and solutions

Benefited by the strong demand from applications such as new energy vehicles, electric bicycles, and consumer electronics, the growth rate of my country's lithium-ion battery industry has gradually picked up since 2020. In the future, with the further advancement of "dual carbon", the new energy vehicle, photovoltaic industry and other subdivisions will continue to receive policy support, with a large room for growth, driving the continuous expansion of the lithium-ion battery industry. At the same time, leading enterprises will also accelerate technological innovation, new materials and new products will continue to emerge, and the international competitiveness of my country's lithium-ion battery industry will be further enhanced.

The most direct impact of the rise in the price of power lithium battery raw materials is the decline in corporate gross profit margins. In order to meet this challenge, companies will maintain a reasonable gross profit margin from two perspectives, reduce manufacturing costs, and increase product prices. In addition, for the power lithium battery industry, the rise in raw material prices and the decline in gross profit margins will further compress the living space of small battery companies, and the market competition for power batteries will further intensify.

As a lithium battery manufacturer, we feel the challenge and hope at the same time. We are optimistic about the future development of this industry. In the future, we will work harder to bring cost-effective products to our customers. If you have any questions, please contact us in time, we will do our best to help you.