High demand may accelerate new Chinese Li salt projects

Higher demand from downstream industries, particularly the new energy vehicle (NEV) power battery and 5G telecommunication sectors, may prompt industry participants to accelerate construction of lithium salt facilities, according to market sources.

Prices for lithium salts, which are a key feedstock in these sectors, have risen in the past few months on firm demand. Argus last assessed prices for 99.5pc grade lithium carbonate at 79,000-84,000 yuan/t ($12,100-12,870/t) ex-works on 4 March, the highest level since October 2018 and up by 109pc at the midpoint from Yn37,000-41,000/t ex-works on 8 September 2020, the lowest since Argus launched this assessment in 2016.

Chinese battery material manufacturer Yongxing Special Materials Technology earlier this month started constructing a 20,000 t/yr lithium carbonate plant in Yichun city in south China's Jiangxi province.

Battery manufacturer Gotion Hi-Tech has signed an agreement to build a lithium-ion battery material production plant, also in Yichun city.

The Chinese government has introduced strong supportive policies for the NEV industry, which will be a major trend in the coming years. There have been similar measures from US and European governments, which have raised demand for battery materials globally.

Major Chinese carmakers have raised their sales guidance for 2021-2025 in view of higher buying interest after the easing of the Covid-19 pandemic and rising demand for NEVs. Domestic NEV sales rose for a seventh consecutive month in January, hitting an all-time high in terms of monthly sales.

Consumers, especially those in the lithium iron phosphate battery sector, have secured ample lithium carbonate supplies until the end of May and are enquiring for deliveries in June on expectations of higher demand in the long term, supported by firm spot requirements from the NEV industry.

China has accelerated infrastructure construction to support the development of the 5G telecommunication sector in the past two years. The country had built over 718,000 5G stations by the end of 2020, accounting for about 70pc of the world's total, according to the ministry of industry and information technology.

China's Shenzhen Desay Battery plans to build a manufacturing base in Vietnam, catering for the packaging and integration of small-and medium-size lithium-ion batteries.