Petrochemical player enters battery market, new hydroxide capacity comes online in China

SQM

Chilean SQM, one of 4 lithium majors, and the largest lowest cost lithium producer announced for Q1 (-58%) decrease year on year in its lithium revenues and (-19%) decrease in lithium volumes, as the company’s lithium business has been affected by a low demand due to coronavirus epidemy. The company still aims to increase its market share amidst this unfavourable environment and to proceed with hydroxide and carbonate capacity expansion according to the schedule, with expansions completed in 2021.  

Livent

US based Livent, with lithium compounds manufacturing sites in Argentina, US and China announced delays on its lithium hydroxide and carbonate capacity expansions in US and China, under the Covid pandemic impact, focusing instead on cashflow/balance sheet management. Its revenues from lithium sales have been lower by 30% for Q1 on year on year basis. Almost two times lower revenue fall for Livent versus SQM, speak volumes about the role of custom-tailored chemical specifications for lithium compounds and their ability to weather down negative price changes. Once battery cathode material manufacturer commits to certain assay, he is more likely to pay the premium, among falling spot prices.

On the other hand SQM has ample cash reserves to weather the storm also as a much larger company, while Livnent needs to pay more attention to its expenses and costs.

Livent revealed to carry over 4,000 MT of lithium hydroxide as inventory into 2020, significant amount considering that the production has been at a level of 21,348 MT of lithium hydroxide in 2019.

New lithium hydroxide capacity from Yahua

One of China’s major lithium compounds producer Sichuan Yahua Industrial has launched a 20,000 t/yr lithium hydroxide converting capacity in Ya’an, Sichuan province. Construction was completed in June 2020 and the company rolled out commercial production this month after trial operations. The company will be on the market with non-public bond offering to finance further expansions both on the lithium chloride and hydroxide side. Lithium hydroxide is used in high nickel battery cathode materials, preferable for better performing EV models, while lithium chloride is used in moisture control, for instance in food industry.  

Petrochemical player to enter battery materials

China’s petrochemical producer Wanhua Chemical is set to acquire battery material manufacturer Yantai Zhuoneng Lithium Battery. Wanhua is ready to pay 351 million yuan (USD 49.4 million) to fully acquire Yantai, with a capacity of 6,000 MT/year for LFP cathode material and 3,000 MT/year for NCM cathode material. Yantai plans to increase capacities to 10,000 MT/year and 6,000 MT/year respectively. The acquisition should help financially to complete the expansion. 

RR