China’s electrolyte demand in Q3 2020 experienced a 45% increase from the previous quarter  which in turn drove a substantial growth in demand for the lithium hexafluorophosphate with market demand increasing by more than 30% compared with the same period last year.

On November 24th, the average prices for lithium hexafluorophosphate were raised again by 5,000 yuan per ton, and the latest quotations were at a level of 95-105,000 yuan/ton.

Since September, lithium hexafluorophosphate prices has continued its rise. So far, the price has risen by more than 40%, making it the largest price increase for any of the segments of the lithium-ion battery industry supply chain.

Industry sources claimed that the ex-factory prices for lithium hexafluorophosphate has increased by 30%-50% from the lowest prices in the first half of the year. It is expected that the current higher price range will be maintained before the end of the year. The unexpected growth of China’s economy and uptick in New Energy Vehicles sales has brought continuous upward momentum.

Price increases are mainly driven by the recovery of market demand and rising raw materials costs.

Also the imbalance between supply and demand for lithium hexafluorophosphate has triggered a new round of price increases. The supply is relatively tight, and the demand from downstream power battery sector has led to a substantial increase in electrolyte shipments, supporting continued price growth.

At present, the production capacity of leading enterprises is reaching a nameplate capacity. While the utilization rate of second tier production capacity is still relatively low. It is expected that the industry average capacity utilization rate will continue to increase as demand increases.

The price of lithium hexafluorophosphate has been at the bottom of the cycle for a long time, and some high-cost production capacity in the industry has been shut down. It will take a certain time for production capacity to re-start, climb, and reach full production rates.

On the other hand, short-term demand for lithium hexafluorophosphate has exceeded expectations, what boosted prices.

In the short term, the power battery sector has become the main driving force in the growth of demand for lithium hexafluorophosphate. Since September, new energy vehicles purchases has returned on the high growth path. The sales of new energy vehicles in October were at 160,000 units, doubling year-on-year; the installed capacity of power batteries was 5.9GWh, a year-on-year increase of 44%.

At the same time, the domestic electronic devices segment experiences a stable growth, and electric bicycles are accelerated by the new government support policies. The market segments such as energy storage base stations, ships, and power tools are also contributing to driving the growth for lithium-ion battery demand.

The unexpected increase in market demand has provided impetus for the likely short-term rebound in the price of lithium hexafluorophosphate.

RR