China’s Battery Producers Fear the Brunt of LiPF6 Shortage, Demand to Stay Firm from EV Battery Makers

China’s battery grade materials are rallying upwards, compelling key battery companies to transfer the prices gains to end consumers. Since the start of 2021, price of lithium battery materials has increased significantly due to multiple factors affecting the Lithium value chain.

The price of battery-grade Lithium Carbonate has escalated from an average price of $9920 per ton in January to more than $31500/ton recently, showing an increase of almost 220% within a single year. The price of lithium hexafluorophosphate (LiPF6) has also jumped from $17,320/ton at the beginning of the year to $88,200/ton in the first week of December, showing an increase of almost 400% in the period.

This surge in LiPF6 prices is mainly due to the soaring price of lithium ore and limited local production. To combat the rising cost pressure, several battery companies in China have started considering rising their product prices. Recently, some market players in the first-tier battery companies have notified their contracted customers to re-negotiate prices or raise their quotations by up to 20% since the start of 2022.

Market sentiments are robust after in mid-November with key battery makers eagerly restocking or closing deals as the year ends. In mid-November, China's Do-Fluoride New Materials entered into a strategic cooperation agreement with major domestic electric vehicle (EV) and power battery manufacturer BYD to supply lithium hexafluorophosphate (LiPF6) over the next four years. As per the deal, Do-Fluoride will supply around 56 KT of LiPF6 to BYD from January 2022 to December 2025. The deal was concluded keeping in mind robust demand from the lithium cathode active material manufacturing sector driven by continued growth in the global EV manufacturing and sales. Several other Chinese battery makers like Enchem Ltd., Ningde times etc. have secured long term agreements recently to ensure continued access to Lithium Hexafluorophosphate for the coming years.

ChemAnalyst expects that the price of lithium battery materials will continue to remain at elevated level till H1 2022, and consumers could think about some supply eases after some expansions scheduled for the next year. As China’s LiPF6 inventories continue to remain at their historic lows the price of downstream Hexafluorophosphoric acid may also further rise in the short term. According to industry estimates, the demand-supply gap of lithium hexafluorophosphate is significantly high and manufacturers are actively pacing up producing to grab the market share.

Lithium hexafluorophosphate (LiPF6) is a commonly-used electrolyte in lithium ion batteries. The demand for LiPF6 has been increasing tremendously due to growing consumer shift towards making electric or hybrid electric automobiles.