Lithium Hydroxide Demand Growth Slower than the Initial Projections

Electric vehicle (EV) demand is surging amid increase stance of significant economies to curb the environmental pollution in line with the Euro-6 standards. The increase in EV demand has led to a battery boom, which in turn, in a cascade increased the demand for raw material used in battery construction. However, demand for a few raw materials is progressing slower than initially estimated by the producers and consumers.

One such raw material used in the battery construction is, Lithium Hydroxide, and battery manufacturers’ preference of the raw material is growing in smaller pace than estimated by the producers previously. The initial estimation and expectation of demand for lithium hydroxide producer ignited a rush to develop processing plants to convert vast reserves of spodumene (a mineral which consists of lithium aluminium inosilicate) or a source of direct lithium in Western Australia into lithium hydroxide for batteries.

However, as per the present status quo, the estimation by lithium hydroxide producers is not moving as per their expectations amid development and delay in commercial production of nickel cathode battery chemistry and other such battery chemistry. The significant battery chemistry includes Lithium-iron phosphate, nickel-cobalt-aluminium and nickel-cobalt-manganese for the use in the automotive industry. 

Livent, a New York Stock Exchange-listed lithium producer recently announced its first quarter 2019 results. The revenue for the quarter declined by 4 per cent, as compared to the same quarter in the year 2018 and stood at $98.3 million.

The company reduced the projection for the upcoming quarter and mentioned one of the factors for the decline is the delay in orders of high-performance lithium hydroxide for 2019 by some customers. Livent also suggested that the delay in order would drive the volumes and average realized price down for lithium hydroxide sales in the year 2019.

In the same announcement, Livent mentioned that it does not expect to see a change in demand for lithium hydroxide for use in high-nickel cathode until late 2019 or early 2020, which in turn, led the company to reduce its price and volume forecast for the year 2019.

The company also estimated weak near-term demand for the lithium hydroxide amid notification from several significant customers to delay the launch of commercial high-nickel cathode chemistry. And, as a result of such delay in the high-nickel cathode, which could pull the demand for lithium hydroxide, the company estimates a decline in the delivery of lithium hydroxide in 2019.

However, Livent mentioned that it would divert its lithium hydroxide to China for use in the cathode, as performance requirements in China are not very high. The notification revelled that the company is still optimistic over the demand for electric vehicle despite weaker current market conditions, as multiple equipment manufacturers are specifying performance requirement, which in turn, would mark a surge in demand of high-nickel cathode chemistries. And, such an increase will prompt the use of high-performance lithium oxide.

In a nutshell, the demand of lithium hydroxide at the cost of lithium carbonate is now progressing slower, as compared to the initial estimation by the producers; however, producers like Livent are still confident over the outlook of EV over the long-term.


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