According to the statistics of the Lithium Industry Branch of the China Nonferrous Metals Industry Association, in 2017, the production of lithium-ion battery cathode materials in China was 323000 tons, a year-on-year increase of 49.54%. The consumption of lithium carbonate was about 110000 tons, a year-on-year increase of 52.14%. More than ten enterprises produced over 10000 tons of cathode materials.


Due to the adjustment of subsidy policies and the dual stimulation of national industrial policies and market demand, the production volume of ternary materials has continued to grow. Enterprises such as Dangsheng Technology, Betray, and Ningbo Rongbai have started producing ternary materials such as NCM811, NCM622, and NCA. The advantages of safety, low cost, and long service life of lithium iron phosphate batteries are widely used in the fields of power vehicles and energy storage. In 2017, the production of lithium iron phosphate materials in China continued to grow. Lithium manganese oxide batteries have the characteristics of good low-temperature performance and high voltage frequency. In the first batch of recommended catalogs for new energy buses in 2017, 38 models were equipped with lithium manganese oxide batteries. Lithium manganese oxide batteries have the highest proportion of new energy buses in the recommended directory, especially the application of lithium manganese oxide batteries in logistics vehicles, which has promoted the production of lithium manganese oxide in China. In 2017, significant progress has been made in the technology and production of lithium-ion battery cathode materials in China.


China has become the world's most important producer and consumer of positive electrode materials. To meet the different needs of the three major markets of power batteries, energy storage lithium batteries, and small lithium batteries, major battery material factories collaborate with downstream customers to develop different types of products and produce them according to customer orders. Due to the optimistic outlook of many enterprises on the development of new energy vehicles, the production capacity of lithium-ion cathode materials has rapidly expanded. According to statistics from the Lithium Industry Branch, the production capacity of the top 30 domestic enterprises exceeds 500000 tons. A group of leading enterprises such as Hunan Shanshan, Ningbo Rongbai, and Beiteri are also building or planning to build positive electrode material production capacity of hundreds of thousands of tons. It is expected that by 2020, the domestic production capacity of positive electrode materials will double.


The application range of lithium batteries is constantly expanding, from electric vehicles, mobile phones, laptops, tablets, digital cameras, power tools, electric bicycles, electric motorcycles, equipment, aerospace and other fields, to electronic watches, CD players MP3、MP4、 Cameras, various remote controls, razors, children's toys, and emergency power supplies for hospitals, hotels, supermarkets, telephone exchanges, and other occasions have also begun to be applied to energy storage power systems such as wind power and solar power plants.


The government provides policy support and financial subsidies for new energy vehicles, and many local governments prioritize the development of the lithium battery industry, providing strong support in areas such as investment attraction. After the release of the 2017 version of the power battery specifications, a large number of power battery companies have launched a wave of expansion. By the end of 2017, the overall production capacity of power batteries exceeded 228 billion kilowatt hours, an increase of 125% over the previous year, further causing overcapacity in the industry. In 2017, the national production of lithium-ion batteries exceeded 11 billion natural units. According to statistics from Asia Chemical Consulting, the production of lithium-ion batteries in China was approximately 88.7GWh in 2017, a year-on-year increase of 29.3%.


In 2017, the sales of new energy vehicles in major countries worldwide reached 1.42 million units, and the domestic production of new energy vehicles reached 794000 units, with sales of 777000 units, an increase of 53.6% and 53.3% year-on-year, respectively. The installed capacity of domestic power batteries is about 33.55 GWh, and according to the disclosure of lithium battery companies, some companies have a certain amount of inventory.


In 2017, the key raw materials for lithium-ion batteries, lithium and cobalt, saw a significant increase, putting enormous pressure on the production of the battery industry. Many companies extended their industrial chain in order to achieve the established goal of 1 yuan/watt hour of power battery cost in 2020. Some car and battery factories invested in key resources of batteries, striving to reduce costs.


At the beginning of 2017, the new subsidy policy for new energy vehicles was not yet introduced, coupled with the impact of the Spring Festival on production, the production of new energy vehicles declined, the production of lithium batteries decreased, and the demand for lithium carbonate consumption driven by lithium battery cathode materials was not significant. The domestic high nickel ternary materials have just started, and the market cannot digest the rapidly increasing lithium hydroxide products, resulting in a decline in the price of lithium hydroxide products. Starting from the second quarter, the operating rate of the lithium battery industry gradually recovered, driving demand for lithium salts such as lithium carbonate, and market prices gradually rose. In the third quarter of 2017, due to environmental inspections and other factors, the price of lithium carbonate increased significantly, while the demand for high nickel and other lithium battery cathode materials remained stable, and the price of lithium hydroxide did not fluctuate much. At the end of the fourth quarter, influenced by the large amount of imported lithium pyroxene raw ore and concentrate in China, as well as the significant breakthroughs in lithium extraction from domestic salt lakes and lithium mica, the price of lithium carbonate gradually fell.


At the beginning of 2018, several listed companies both domestically and internationally announced their intention to enter the lithium carbonate industry or invest in lithium resources. In the past two to three years, more and more companies have invested in lithium resources in Australia, Africa, South America and other places, and the exploration and development activities of lithium resources have become increasingly active. In 2018, three large lithium mines will be put into operation in Australia, and lithium concentrates will be gradually transported to China. The amount of lithium ore resources transported from overseas to China will also increase significantly. These will play a positive role in ensuring the domestic and even global supply of lithium carbonate.


The price trend of lithium carbonate and lithium hydroxide depends crucially on market demand and effective supply. According to the support of various countries for the new energy vehicle industry and the plans of various automobile factories, it is expected that the global demand for lithium will increase by about 50000 tons of lithium carbonate equivalent in 2018. More than half of the production capacity of domestic lithium extraction enterprises requires the purchase of spodumene concentrate from external sources. Even if they purchase raw ore to process the concentrate, their raw material costs are not high. At the same time, the price of lithium carbonate abroad is gradually rising, and the demand for lithium salts in Japan, South Korea, Europe, and America is also increasing year by year. Overseas lithium salt projects have high investment costs, long construction periods, and slow capacity release.


The newly added lithium carbonate processing capacity is mainly in China, and the lithium salt processing project that started construction last year is also proceeding according to the planned schedule. The projects and production capacity put into operation in the first half of this year are relatively small, and coupled with the debugging and adjustment of the production line, it will not be until the second half of the year that the output can be released. It is expected that the tight supply situation will be effectively reversed in the fourth quarter.


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