Lithium carbonate prices keep falling, and this is affecting the cost of electrolyte, one of a main components of lithium batteries. Duofuo, a leading Chinese electrolyte manufacturer, said at an investors conference that the drop in lithium carbonate prices has made lithium hexafluorophosphate prices fall quickly.
This means the lower lithium carbonate prices are still causing a chain reaction in the supply chain of lithium-ion batteries. Electrolytes, which are one of the four main materials in lithium batteries, are made of solvents, solutes, and various additives. Lithium hexafluorophosphate is the most popular lithium salt because it has great characteristics like electrical conductivity, solubility, and thermal stability.
The cost of lithium hexafluorophosphate mainly comes from lithium carbonate, anhydrous hydrofluoric acid, and phosphorus pentachloride. Lithium carbonate makes up to 80% of the cost of lithium hexafluorophosphate and over 30% of the cost of electrolyte.
Lithium carbonate prices have been dropping quickly, which has made lithium hexafluorophosphate prices fall by $1,500 per day (10,000 yuan per day). Since November 2022, the price of lithium carbonate and lithium hexafluorophosphate dropped together. As of today, the price of lithium carbonate has fallen by 55% from the highest point in the second half of 2022, and the price of lithium hexafluorophosphate has fallen by 60%. In terms of overall decline, lithium hexafluorophosphate fell even more.
The drop in the price of core raw materials also affects the price of electrolyte. Duofuduo’s 2022 financial report shows that the company’s revenue in the third quarter was $490 million USD (3.269 billion yuan), and the net profit attributable to the parent company was $49.05 million USD (327 million yuan). In the fourth quarter, the company’s revenue was $459.3 million USD (3.062 billion yuan), and the net profit attributable to the parent company was $43.05 million USD (287 million yuan). According to industry analysts, the price of lithium hexafluorophosphate fell in the fourth quarter due to weak market demand and declining costs.
Compared to 2021, where downstream demand was booming and there was insufficient electrolyte production capacity, the price of lithium hexafluorophosphate exceeded $75,000 USD (500,000 yuan) per ton.
The expansion of electrolyte enterprises has significantly improved the supply and demand imbalance. Tinci Materials announced at the end of 2021 that $123 million USD (820 million yuan) would be invested in constructing an electrolyte project with an annual output of 200,000 tons. Xinzhoubang’s second-phase projects in Poland, Tianjin, and Hasford have also been put into production, promoting the price return of lithium hexafluorophosphate in the first half of 2022.