As the “superstar” of the lithium battery industry chain since 2021, the price of lithium carbonate has fluctuated greatly in the past two years. It once reached the top and headed towards a price of 600,000 yuan/ton. The demand in the first half of 2023 was also During the trough period, it fell to 170,000 yuan/ton. At the same time, as lithium carbonate futures are about to be launched, SMM will provide readers with a comprehensive review of the lithium industry chain overview, resource end, smelting end, demand end, supply and demand pattern, order signing form and pricing mechanism in this article.
Overview of the lithium industry chain:
As the metal element with the smallest atomic weight, lithium has a large charge density and a stable helium-type double electron layer. It has extremely strong electrochemical activity and can react with other materials to form various compounds. It is an excellent material for manufacturing batteries. Best choice. In the lithium industry chain, the upstream includes lithium mineral resources such as spodumene, lepidolite, and salt lake brine. After lithium resources are extracted, they can be processed in each link to produce primary lithium salts, secondary/multiple lithium salts, metal Lithium and other forms of products. Products in the primary processing stage mainly include primary lithium salts such as lithium carbonate, lithium hydroxide, and lithium chloride; further processing can produce secondary or multiple lithium products such as lithium iron phosphate, lithium cobalt oxide, lithium hexafluorophosphate, and metallic lithium. Various lithium products can be widely used in emerging fields such as lithium batteries, ceramics, glass, alloys, greases, refrigerants, medicine, nuclear industry and optoelectronics.
Lithium resource end:
From the perspective of lithium resource types, it can be divided into two main lines: primary materials and recycled materials. Among them, the lithium resources of raw materials mainly exist in salt lake brine, spodumene and lepidolite. Recycled materials mainly obtain lithium resources through retired lithium batteries and recycling.
Starting from the raw material path, the distribution concentration of overall lithium resource reserves is relatively high. According to the latest data released by USGS, global lithium resource reserves total 22 million tons of lithium metal equivalent. Among them, the top five countries in the world’s lithium resources are Chile, Australia, Argentina, China, and the United States, accounting for 87% in total, and China’s reserves account for 7%.
Further segmenting the resource types, salt lakes are currently the main source of lithium resources in the world, mainly distributed in Chile, Argentina, China and other places; spodumene mines are mainly distributed in Australia, Canada, the United States, China and other places, and the resource distribution concentration is It is lower than the salt lake and is the resource type with the highest degree of commercial lithium extraction at present; lepidolite resource reserves are small and concentrated in Jiangxi, China.
Judging from the output of lithium resources, the total output of global lithium resources in 2022 will be 840,000 tons of LCE. It is expected to achieve a compound annual growth rate of 21% from 2023 to 2026, reaching 2.56 million tons of LCE in 2026. In terms of countries, CR3 is Australia, Chile, and China, accounting for a total of 86%, indicating a high degree of concentration.
In terms of raw material types, pyroxene will still be the dominant raw material type in the future. Salt lake is the second largest raw material type, and mica will still play a supplementary role. It is worth noting that there will be a wave of scrapping after 2022. The rapid growth of inter-production waste and decommissioning waste, as well as breakthroughs in recycling lithium extraction technology, will boost the rapid growth of recycling lithium extraction volume. It is expected that recycled materials will reach 8% in 2026. Proportion of lithium resource supply.
All about lithium! A complete overview of the lithium industry chain
Lithium smelting end:
China is the country with the highest lithium smelting output in the world. Looking at provinces, China’s lithium carbonate production locations are mainly based on the distribution of resources and smelting enterprises. The main production provinces are Jiangxi, Sichuan and Qinghai. Jiangxi is the province with the largest lepidolite resource distribution in China, and has the production capacity of well-known smelting companies such as Ganfeng Lithium Industry, which produces lithium carbonate and lithium hydroxide through imported spodumene; Sichuan is the province with the largest pyroxene resource distribution in China, and is also responsible for hydroxide production. Lithium production center. Qinghai is China’s largest salt lake brine lithium extraction province.
All about lithium! A complete overview of the lithium industry chain
In terms of companies, in terms of lithium carbonate, the total output in 2022 will be 350,000 tons, of which CR10 companies accounted for a total of 69%, and the production pattern is relatively concentrated. Among them, Jiangxi Zhicun Lithium Industry has the largest output, accounting for 9% of its output. There is no absolute monopoly leader in the industry.
All about lithium! A complete overview of the lithium industry chain
In terms of lithium hydroxide, the total output in 2022 will be 243,000 tons, of which CR10 companies account for as much as 74%, and the production pattern is more concentrated than that of lithium carbonate. Among them, Ganfeng Lithium Industry, the company with the largest output, accounts for 24% of the total output, and the leading effect is obvious.
All about lithium! A complete overview of the lithium industry chain
Lithium demand side:
Lithium consumption demand can be divided into two major sectors: the lithium battery industry and traditional industries. With the explosive growth of power and energy storage market demand at home and abroad, the proportion of lithium battery demand in total lithium consumption is rising year by year. According to SMM statistics, between 2016 and 2022, the proportion of lithium carbonate consumption in the lithium battery field increased from 78% to 93%, while lithium hydroxide jumped from less than 1% to nearly 95%+. From a market perspective, the total demand in the lithium battery industry is mainly driven by the three major markets of power, energy storage and consumption:
Power market: Driven by global electrification policies, car company transformation and market demand, power market demand will achieve explosive growth in 2021-2022, accounting for an absolute dominance in lithium battery demand, and is expected to maintain stable growth in the long term. .
Energy storage market: Under the influence of factors such as the energy crisis and national policies, the three major markets of China, Europe, and the United States will work together and will become the second largest growth point for lithium battery demand.
Consumer market: The overall market is becoming saturated, and the long-term growth rate is expected to be low.
All about lithium! A complete overview of the lithium industry chain
Overall, the demand for lithium batteries will increase by 52% year-on-year in 2022, and will steadily increase at a compound annual growth rate of 35% from 2022 to 2026, which will further increase the lithium battery industry’s share of lithium demand. In terms of different applications, the energy storage market has the highest growth rate. The power market continues to develop as global new energy vehicles continue to develop. The consumer market mainly relies on the growth of electric two-wheeled vehicles and new consumer products such as drones, e-cigarettes, and wearable devices. The compound annual growth rate is only 8%.
From the perspective of direct consumer companies of lithium salts, in terms of lithium carbonate, the total demand in 2022 will be 510,000 tons. Consumer companies are mainly concentrated in lithium iron phosphate cathode material companies and medium and low nickel ternary cathode material companies, and downstream companies are concentrated in consumption. The degree is low, of which CR12 accounts for 44%, which has a strong long-tail effect and a relatively dispersed pattern.
All about lithium! A complete overview of the lithium industry chain
In terms of lithium hydroxide, the total consumption in 2022 will be 140,000 tons. The concentration of downstream consumer companies is significantly higher than that of lithium carbonate. CR10 accounts for 87%. The pattern is relatively concentrated. In the future, as various ternary cathode material companies will advance With high nickelization, industry concentration is expected to decline.
All about lithium! A complete overview of the lithium industry chain
Lithium resource supply and demand structure:
From a comprehensive perspective of supply and demand, lithium has actually completed a cycle between 2015 and 2019. From 2015 to 2017, new energy demand achieved rapid growth stimulated by state subsidies. However, the growth rate of lithium resources was not as fast as demand, resulting in a mismatch between supply and demand. However, after the state subsidies declined in 2019, terminal demand shrank rapidly, but early investment Lithium resource projects have gradually reached production capacity, and lithium has officially entered a surplus cycle. During this period, many mining companies declared bankruptcy, and the industry ushered in a round of reshuffle.
This industry cycle starts at the end of 2020:
2021-2022: Terminal demand explodes rapidly, forming a mismatch with the supply of upstream lithium resources. From 2021 to 2022, some lithium mining projects that were suspended in the last surplus cycle will be restarted one after another, but there is still a large shortage. At the same time, this period was also a stage when lithium prices rose rapidly.
2023-2024: Resumption of production projects + newly built greenfield projects are expected to reach production in succession between 2023 and 2024. The growth rate of new energy demand is not as fast as that in the initial stage of the outbreak, and the degree of resource surplus will reach its peak in 2024.
2025-2026: The growth rate of upstream lithium resources may slow down due to continued surplus. The demand side will be driven by the energy storage field, and the surplus will be effectively alleviated.
All about lithium! A complete overview of the lithium industry chain
Lithium salt signing situation and settlement mechanism
The order signing modes of lithium salt mainly include long-term orders and zero orders. Zero orders can be defined as flexible trade. The trading parties do not agree on the trading products, quantities, and pricing methods within a certain period, and realize independent quotations; among them, long-term orders can be further divided into three categories:
Volume lock formula: The supply volume and settlement price method are agreed in advance. The settlement price will be based on the (SMM) monthly average price of the third-party platform, supplemented by an adjustment coefficient, to achieve market-based settlement with medium flexibility.
Volume lock and price lock: The supply volume and settlement price are agreed in advance, and the settlement price is fixed in the future settlement cycle. Once the price is locked, it will not be modified in the future/after the adjustment mechanism is triggered, the buyer and seller will re-agree on the fixed price, which has low flexibility.
Lock quantity only: only form a verbal/written agreement on the supply quantity, but there is no upfront agreement on the price settlement method of the goods, which is highly flexible.
Between 2021 and 2022, due to sharp price fluctuations, the signing pattern and pricing mechanism of lithium salts are also quietly changing. From the perspective of contract signing methods, in 2022, 40% of companies will use a pricing mechanism that only locks in volume, mainly because the supply in the lithium market is tight and prices are high. In order to protect profits, upstream smelting companies will often adopt a method of locking volume but not price; in the future, Look, as supply and demand return to rationality, buyers and sellers have become the main demands for supply and price stability. It is expected that the proportion of long-term lock-in volume and formula lock (linked to the price of SMM lithium salt to achieve formula linkage) will increase.
From the perspective of lithium salt purchasers, in addition to direct purchases by material companies, the increase in lithium salt buyers from terminal companies (battery, car companies, and other metal mining companies) has enriched the overall types of purchasing companies. Considering that new players have to consider The long-term stability of the industry and familiarity with the pricing of mature metals are expected to have a certain impact on the industry’s pricing mechanism. The proportion of the pricing model of lock-in volume lock formula for long-term orders has increased.
All about lithium! A complete overview of the lithium industry chain
From an overall perspective, for the lithium industry chain, the price of lithium salt has become the pricing hub of the entire industry chain, promoting smooth transmission of prices and costs between various industrial links. Looking at it in sections:
Lithium Ore – Lithium Salt: Based on the price of lithium salt, lithium ore is priced floatingly through profit sharing.
Precursor – cathode link: Anchoring the price of lithium salt and other metal salts, and multiplying it with the unit consumption and discount coefficient to achieve price linkage updates
Positive electrode – battery cell: anchors the price of the metal salt and multiplies it with the unit consumption and discount coefficient to achieve price linkage updates
Battery cell – OEM/integrator: Separate the price of cathode/lithium salt (lithium salt is one of the main raw materials in the cathode). Other main materials adopt a fixed price method. According to the fluctuation of lithium salt price, a price compensation mechanism is signed. , to achieve price linkage settlement.
Post time: Nov-06-2023