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Huayou Cobalt’s First Lithium Salt Production Line in China Signals Industry Rebound amid Pricing Shifts

Huayou Cobalt, a leading player in the cobalt industry, recently marked the initiation of its first lithium salt production line in China, signifying the project’s transition into the production commissioning phase. The ceremony was hosted by Guangxi Huayou Lithium Industry Co. Ltd., a wholly-owned subsidiary of Huayou Cobalt. The new project boasts an annual production capacity of 50,000 tonnes of battery-grade lithium salts.

This landmark development in the Chinese lithium industry in 2023 joins the forward momentum of various domestic lithium salt projects. The sector’s dynamism is being driven by considerable industry interest in the production, sales, and pricing trends of lithium salts.

The new year ushered in declining lithium salt prices due to a temporary slowdown in demand from the new energy vehicle sector and an inventory backlog throughout the supply chain. The fall was significant, with the cost of battery-grade lithium carbonate tumbling from its 500,000 yuan/tonne ($70,000/MT) peak to approximately 180,000 yuan/tonne ($25,000/MT).

This price drop sparked caution among upstream companies. However, the industry displayed a turnaround in Q2, thanks to reduced mining activities in Q1 and increased downstream demand. Battery-grade lithium carbonate prices rebounded to around 300,000 yuan/tonne, signalling an overall industry recovery.

Simultaneously, the industry is grappling with lithium salt costs. Despite declining domestic lithium carbonate prices, international lithium ore prices remain robust. Geopolitical considerations and local policies have amplified the volatility of imported lithium salt prices.

The first quarter of 2023, for example, saw Chilean policy disruptions intensifying market apprehensions regarding lithium supply. The slower-than-expected advancement of lithium resources in South American salt lakes kept lithium salt prices from these manufacturers high. Similarly, in Australia, a combination of labour shortages and logistics constraints limited lithium mining output, keeping lithium ore prices elevated.

Domestic lithium battery market shipments will cross the 1TWh mark in 2023, including over 850GWh of power battery shipments and more than 180GWh of energy storage battery shipments.

Currently, 65% of domestic lithium raw materials demand is met by importing spodumene. In response to this, several enterprises, including Yahua Group, Huayou Cobalt Industry, and China Mining Resources, are accelerating their acquisition of overseas lithium mines. Simultaneously, domestic lithium salt mining projects are being systematically rolled out to gradually fill the gap in lithium salt resource capacity.

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