CRU: Lithium Hydroxide Prices Firm due to Coronavirus
C
hina's Ganfeng lithium has announced that it has raised its battery grade lithium hydroxide spot prices by no more than 10pc on 12 February, citing increased costs of raw materials and transportation fees due to novel coronavirus (Covid-19).
In this insight we will focus on the impacts of the Covid-19 on the global market for lithium hydroxide, a key ingredient for high-nickel lithium-ion batteries. Overall, CRU believes the impact of the virus will drive prices upwards to some extent - but assuming the virus is contained, the effect will be short-lived.
Covid-19 is creating a bottleneck in the lithium hydroxide supply chain. Overseas markets, mostly Japan and South Korea, purchased more than 80% of China's hydroxide output in 2019. Overseas consumers are finding it more challenging to source lithium hydroxide due to issues with customs clearance done because of the outbreak. Domestic users are also facing challenges too due to transportation disruptions, worse they may find it's more difficult to get the material as converters strive to keep their international customers well supplied. These effects are further compounded by the chemical's short shelf life. Lithium hydroxide is both highly hygroscopic and subject to oxidation, and therefore consumers usually do not keep large inventories of the material.
China produced around 79% of global lithium hydroxide in 2019, according to CRU's estimations. In our last insight - Coronavirus; Key implications for battery metals, published on 5 February - we identified the two main risks to supply from the outbreak, namely
Chinese plant production could be squeezed due to delayed restarts, and
disrupted logistics and delayed return of workers could cause supply chain bottlenecks.
✔️ CRU: Lithium Hydroxide Prices Firm due to Coronavirus
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