Lithium hydroxide in the first half of 2025: price decline, production reduction, and sharp drop in exports | CLPC analysis

Lithium hydroxide in the first half of 2025: price decline, production reduction, and sharp drop in exports | CLPC analysis

1、 Price Review

1.2024.12-2025.2

Due to maintenance and the conversion of flexible production lines to lithium carbonate, the supply side experienced a significant decrease in production before the year, further supporting its upward trend in prices. Part of the demand side has engaged in bulk stocking behavior due to the uncertainty of the new year's long-term agreement, which has driven prices to continue to rise. However, due to the overall weakness of the demand side, the upward trend is hindered, and the overall price is showing a gradual increase trend. Before the holiday, individual transactions were relatively active, and prices maintained a slow upward trend.

2.2025.2-2025.3

After the holiday, due to a large amount of inventory in the early stage, the overall performance of individual transactions in the market was flat, and prices showed a downward trend in the slow recovery of demand. In mid to late March, although the demand side for ternary materials showed a decent growth trend, the high upstream inventory led to a loosening of the pricing mentality, resulting in a decrease in long-term agreement discounts and individual order discounts compared to the previous month.

3.2025.4-2025.7

From April to June, the growth rate of demand was limited, and the inventory on the supply side was already high. Coupled with the accelerated decline in lithium carbonate and lithium ore prices, the decline in lithium hydroxide prices was amplified synchronously. By July 2025, due to frequent rumors in the market, the price of lithium carbonate will experience an irrational and sustained rebound in futures prices, which will drive the rapid recovery of mineral prices and significantly slow down the decline of lithium hydroxide. After a significant increase in lithium carbonate prices, there will be a certain tendency for recovery.

2、 Production volume

The production of lithium hydroxide in CHINA LITHIUM PRODUCTS TECHNOLOGY CO LTD(CLPC) in H1 2025 decreased by 19% year-on-year compared to H1 2024, and decreased by 21% month on month compared to H2 2024, with a operating rate of less than 40%.

By category, although some new production capacity was added to the smelting end in the first half of the year, which brought a slight increase in overall output, due to the weak demand growth in the past six months and the single sales channel of lithium hydroxide, some upstream smelters have reduced their production, resulting in the smelting end production remaining at the current low level.

On the causticization end, with the fluctuation of lithium carbonate prices, most of the causticization end is in a loss making state, which leads to few in production factories producing lithium carbonate from ore materials and then undergoing causticization. Most in production factories use salt lake discharge for production.

Overall, the concentration of lithium hydroxide production has further increased compared to H1 2024, with CR5 accounting for over 80% in H1 2025.

3、 Requirement

The production in H1 2025 remained relatively weak compared to the previous period, with a month on month increase of 6%. The rush for exports at the end of 2024 has brought about a certain demand front, while the domestic power market is continuously squeezed by iron lithium power, resulting in a relatively slow growth rate of orders in the first half of 2025. From the perspective of product structure, the 6 Series has become the mainstream choice in the domestic power market due to its cost and performance advantages, and its market share continues to expand, stabilizing at over 30%; Although the 8 series is still the main force in high nickel, its market share has slightly declined compared to 2024H2 due to lower than expected overseas car sales.

4、 Import and export

In H1 2025, the export of lithium hydroxide decreased by 29% month on month and 61% year-on-year, showing a significant weakening. Due to weak demand for overseas ternary orders and longer inventory cycles, the demand for lithium hydroxide mainly imported from Japan and South Korea has significantly decreased; The trend of ternary material orders shifting domestically due to the transfer of terminal demand has led to a decline in the demand for lithium hydroxide in downstream overseas markets.

In H1 2025, there will be a significant increase in domestic imports, mainly from Australia and Argentina. Part of it belongs to the previous inventory and flows to the domestic market at lower prices in the production level, while another part belongs to the transfer of original orders from Japan to Korea.

5、 Balance

From the perspective of supply and demand, there was a double reduction in supply and demand at the beginning of the first quarter, but the significant decrease in exports resulted in a slight surplus in the overall balance; By March, the recovery of exports was limited, and there was a significant increase in the production of salt factories after the end of the year. With a slower pace of demand recovery, the surplus was amplified. Entering the second quarter, demand continued to increase slightly, while the supply side showed some reduction behavior due to decreasing prices and high inventory, coupled with the maintenance situation of some enterprises, resulting in a slight shortage of balance.

6、 Inventory

Under the production trend of relying on sales to determine production in the upstream, the accumulation of inventory in the industry has been somewhat alleviated: in the second quarter, due to a slight increase in demand, downstream and end users increased their pick-up volume, resulting in a slight overall destocking.

Current inventory days: Upstream close to February, downstream less than a month.

7、 Outlook

Half of 2025 has already passed under the expectation of "lithium hydroxide entering the futures market quickly". It is still unknown whether lithium hydroxide futures will be successfully launched in the second half of the year based on the progress of other queued futures. However, from the characteristics of lithium hydroxide being difficult to store and a hazardous chemical, it is also unknown whether the launch of futures can successfully stimulate market activity. Looking ahead to the second half of the year, at the current stage, due to the lack of significant growth expectations in domestic and international demand for the three elements, upstream production plans are becoming more conservative; Upstream lithium hydroxide production enterprises have basically maintained their current output level, with only a few production lines experiencing a certain increase in production due to climbing production, resulting in a production volume of 30000 yuan. However, it is worth noting that some companies have a smoother transition from flexible production lines to hydrocarbon production, and it cannot be ruled out that there may be some increase in production in individual months due to sudden demand or better prices.

On the demand side, the power market is still mainly driven by the Chinese market, and the demand increment remains relatively stable. However, with the expected continuous increase in the penetration rate of iron lithium power both domestically and internationally, the demand for ternary power is expected to remain weak.

In terms of price, the adjustment of internal order structure in demand has led to a sustained high level of customer supply and long-term contracts for lithium hydroxide, exacerbating the already scarce demand for individual purchases and making the willingness to pay for zero orders more cautious. During the signing of the long-term agreement, due to the lower settlement price between downstream and terminal, the discount continued to decrease and the upward pressure persisted when negotiating with upstream.

But we still have lithium carbonate. The price of lithium carbonate is not only driven by downstream demand, but also influenced by the sentiment of the futures market, which provides hedging space for traders and lithium salt factories, promoting synchronous changes in mineral prices. The price changes in this part can significantly affect the upstream production plan and negotiation sentiment of lithium hydroxide, thereby giving price action power.

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