Analysis of the Development Status and Competitive Landscape of China's Lithium Hydroxide Industry in 2024

Lithium hydroxide exists in the form of a white crystalline powder. It is an inorganic compound that possesses excellent water solubility while being slightly soluble in ethanol. Because of its strong alkalinity, lithium hydroxide plays an important role in the manufacturing process of power batteries, glass, ceramics and other products.

In the process of lithium hydroxide production, lithium resources is an indispensable upstream raw materials, mainly including lithium ore and brine. For the production of lithium hydroxide, it is mainly divided into 'mechanized production' and 'one step production'. In foreign countries, the mainstream production mode of 'crochet wool "is this process mode, which is relatively simple and mature, with relatively low investment cost. The quality of lithium hydroxide produced by it is relatively low, and the purity of raw materials is also high.

In contrast, domestic lithium hydroxide enterprises mainly adopt the production method of 'one step'. Although this method has high product quality, it has a long process and relatively high investment cost. Nevertheless, with the continuous progress of technology and the gradual reduction of cost, it is believed that the 'one-step 'production method will be more and more widely used in the domestic lithium hydroxide industry. 

1) Upstream and downstream structure of the lithium hydroxide industry chain

The upper reaches are mainly lithium resources, including lithium ore and salt lake brine, etc. The most common lithium ores are spodumene and lepidolite, of which lepidolite is dominant in China, such as tantalum-niobium mine in Yichun, Jiangxi Province, which is the largest lepidolite mine in the world. In addition, South America and Oceania are the main distribution areas of lithium resources in the world, of which Chile's lithium resources account for 35.7% of the total global reserves. On the other hand, lithium resources in salt lakes are mainly distributed in the west of China, such as Qinghai and Tibet.

The middle reaches are the production of lithium hydroxide, including the extraction of lithium from ore and salt lake. China has advantages due to the shortage of lithium ore reserves, and its domestic lithium resources are highly dependent on import. In recent years, China has accelerated the exploration and development of lithium resources, and the output of lithium has increased continuously.

Downstream is the application field of lithium hydroxide, which mainly including refrigeration and lubrication, batteries, glass, ceramics, aerospace and so on. Especially with the rapid development of the new energy vehicle market, lithium hydroxide, as an important raw material for manufacturing power batteries, has a rapid growth in demand. High-nickel ternary batteries is an important application field of lithium hydroxide. However, due to the high sintering temperature of high-nickel ternary materials, using lithium carbonate as a raw material will lead to incomplete decomposition and affect the performance of the battery, so lithium hydroxide becomes an inevitable choice for high-nickel ternary batteries. 

2) Development status of lithium hydroxide industry

The distribution of lithium resources in the world is obviously unbalanced, mainly concentrated in South America and Oceania. In 2022, for example, Chile's lithium reserves accounted for 35.7% of the world's total reserves, while China's lithium reserves only account for 7.68% of the global total reserves. There are two main ways to get lithium resources: extracting lithium from ore and extracting lithium from salt lake. In China, lithium resources in salt lakes are mainly distributed in the west, especially in Qinghai. In 2022, the lithium reserve in Qinghai was 1,866,100 tons. However, due to the fragile natural environment of the Tibetan Plateau region and the lack of professional and technical personnel, the development of salt lakes is difficult, so the supply of lithium resources in China mainly relies on lithium extraction from ores and imports.

The demand for lithium resources is increasing rapidly, and its strategic position is increasingly prominent. In order to cope with this trend, China is speeding up the exploration and development of lithium resources. From 2018 to 2022, the output of lithium minerals in China continued to increase, and the growth rate increased in 2022. In that year, the lithium mineral production in China was 19,000 tons, up 35.7% year-on-year, accounting for 14.62% of global lithium mineral production in the same period, up 1.53 percentage points compared with 2021. Although China's lithium production has increased, due to the lack of lithium reserves advantage, the dependence on domestic lithium resources import is still high.

It is worth noting that from January to September 2023, the output of lithium hydroxide in China was significantly higher than that in the same period in 2022, with a cumulative output of 220,350 tons, up by 31.07% year-on-year.. However, by the third quarter of 2023, the increasing momentum of lithium hydroxide production in China began to weaken, and the output decreased year-on-years. Especially in September, 2023, the output of lithium hydroxide in China was 23,999 tons, down 5% year-on-year. This change is mainly due to the low demand for high nickel at home and abroad, as well as the low level of lithium hydroxide prices, resulting in lower production enthusiasm of lithium hydroxide enterprises and a decline in production growth.

In the global economic environment, geopolitical conflicts occur frequently, the world economy fluctuates greatly, the global consumer market tended to be rational, and the market for high-value consumer goods such as automobiles has cooled down slightly. The combined effect of these factors has led to a less-than-expected increase in demand for upstream products. Therefore, the supply and demand market for lithium hydroxide will continue to be weak in the short term. In October, 2023, the output of lithium hydroxide decreased slightly to around 23,500 tons. 

3) analysis on the competitive pattern of the lithium hydroxide industry

The concentration of the global lithium hydroxide market is relatively high, and China, as an important force in the global lithium hydroxide production, can not be ignored. Among the top seven lithium hydroxide processing enterprises in the world, four are from China, and their production capacity together accounts for more than half of the market. Taking 2022 as an example, Ganfeng Lithium Industry's production capacity in this field accounted for 21% of the global share, ranking first, followed by Tianhua Xinneng, with its production capacity accounting for 15% of the global lithium hydroxide processing capacity.

Although the supply of lithium resource in China is obviously insufficient, China's lithium hydroxide production capacity is still very competitive in the world. Behind this achievement, China's technical support and continuous innovation in this field are the main reasons. By introducing advanced technology and the strengthening research and development, the lithium hydroxide industry in China has made remarkable progress and made important contribution to the development of the global new energy industry.

China occupies an important position in the global lithium hydroxide market with strong competitiveness and influence. In the future, with the rapid development of the new energy industry and the continuous progress of technology, China's lithium hydroxide industry is expected to continue to maintain its leading position, injecting new impetus into the development of the global new energy industry.