Basic knowledge and industry overview of lithium carbonate products

Lithium carbonate is a provider of lithium ions in lithium batteries and plays an important role in the industry chain. Since January 2024, there have been frequent disruptions in the supply side of the lithium carbonate market, which have had a short-term impact on the price of lithium carbonate. This article will introduce the basic knowledge of lithium carbonate. Lithium carbonate production line, pressure vessel, Jiangxi Zongheng Special Equipment Co., Ltd

1. Basic properties of lithium carbonate

Lithium carbonate is a type of basic lithium salt with a chemical formula of Li2CO3. It is a colorless monoclinic crystal or white powder, belonging to inorganic compounds. It is slightly soluble in water and dilute acid, and insoluble in ethanol and acetone.

2. Classification and uses of lithium carbonate

Lithium carbonate is divided into industrial grade lithium carbonate and battery grade lithium carbonate according to their different contents. Industrial grade lithium carbonate can be used to prepare energy storage lithium iron phosphate and lithium manganese oxide products, and is widely used in industries such as glass, ceramics, synthetic rubber, and pharmaceuticals; Battery grade lithium carbonate is generally used to prepare products such as lithium cobalt oxide, low to medium nickel ternary materials, and power type lithium iron phosphate.

3. Distribution characteristics and production process of lithium carbonate

Lithium carbonate products are highly resource dependent and have strong regional characteristics. In the East China region, lithium extraction from lithium mica ore and lithium extraction from waste recycling are the main methods, which are relatively concentrated in Jiangxi Province; The southwestern region is the main production area for lithium extraction from ores, with Sichuan Province as the core; The northwest region is a lithium extraction production area based on the salt lake resources in Qinghai Province.

Due to different sources of raw materials, the production process of lithium carbonate also has significant differences. The development of lithium extraction process from spodumene is relatively mature, with high lithium recovery rate and low entry threshold. Mainstream technology enterprises are continuously improving recovery rate, reducing ore consumption and expanding production capacity through technological transformation.

In terms of lithium extraction technology from salt lake brine, due to the different endowments of salt lake resources in China, there is a significant difference in the magnesium lithium ratio. Therefore, the lithium extraction technology used in each salt lake needs to be in line with its own resource situation and is not universally applicable. The adsorption method currently used in Cha'erhan Salt Lake can produce battery grade lithium carbonate in small quantities, while Dongtai Jinnaer Salt Lake, due to its low magnesium lithium ratio, can produce quasi battery grade products and enter some battery material supply chains. At present, there is no industrialized lithium extraction technology that can adapt to all types of salt lake brines, and the applicability of lithium extraction technology is single. Only by comprehensively applying different lithium extraction technologies can lithium resources in salt lakes be more efficiently recovered.

4. Overview of upstream and downstream lithium carbonate

Lithium carbonate is located in the middle and upper reaches of the industrial chain, with upstream raw materials such as lithium ore, lithium mica, brine and other lithium resources. The direct downstream products are lithium battery cathode materials (lithium iron phosphate, ternary materials, lithium cobalt oxide, lithium manganese oxide), glass, ceramics, rubber and other industries. Among them, the cathode material is the largest direct downstream industry of lithium carbonate, accounting for about 84.2% of the consumption. Depending on the different cathode material products, the unit consumption of lithium carbonate ranges from 0.2 to 0.4 tons.

5. Cost composition of lithium carbonate

The production cost of lithium carbonate varies greatly depending on different raw materials.

Extracting lithium from brine, the cost of salt lake brine is 3000-4000 yuan/ton, and different salt lake processes have different costs, roughly ranging from 20000 yuan/ton to 40000 yuan/ton. Lithium extraction from spodumene, calculated based on lithium concentrate with a lithium oxide content of 6%, can produce 1 ton of lithium carbonate from 8 tons of lithium concentrate, and the raw material cost fluctuates with the fluctuation of lithium concentrate prices. Lithium extraction from lithium mica, which has a low lithium oxide content, requires 17-20 tons to produce 1 ton of lithium carbonate for lithium mica ore with a yield of 2% -3.5%. The raw material cost fluctuates with the price of lithium mica.

6. Overview of the development of lithium carbonate industry

Lithium carbonate products are in the growth stage, and with the gradual increase in supply growth rate, the industry will gradually transition to the mature stage in the next few years. The difficulty of obtaining upstream raw material resources for lithium carbonate is high, the requirements for enterprise operating funds are high, and the industry threshold is high. Listed companies, state-owned enterprises, and joint ventures account for a large proportion. Acquisition, equity participation, and expansion of leading enterprises have been the main ways for domestic lithium carbonate enterprises to expand their production capacity and downstream enterprises to extend upwards in recent years. In recent years, small and medium-sized enterprises have been operating unstably, with some gradually transitioning to contract manufacturing production.

7. Changes in the supply and demand structure of lithium carbonate

In terms of the scale of domestic lithium carbonate production enterprises in China, the number of enterprises with a production capacity of less than 20000 tons per year accounts for about 75%. The difficulty in obtaining raw materials and the level of technology are factors that restrict the scale of enterprise production capacity. The main application areas of lithium carbonate in China are in the lithium battery industry, and its consumption proportion of lithium carbonate has been increasing year by year. The development of lithium carbonate products is closely related to the lithium battery industry.

From the perspective of supply and demand structure, the supply and demand pattern of lithium carbonate in China has undergone multiple changes. From the past five years, China's lithium carbonate industry has shifted from oversupply to tight supply, and 2020 is the time point for changes in the industry's supply and demand structure. In 2020, favorable policies for the development of the terminal industry drove midstream material enterprises to concentrate production, while the long production cycle of lithium carbonate plants resulted in a slower increase in domestic supply than demand growth. 2022 is a year of subsidies for new energy, and in the second half of the year, the terminal industry actively engages in production and sales, with buyers rushing to grab goods in advance, driving the continuous tightening of lithium salt spot market supply. At the beginning of 2023, the terminal consumption will be halved, and various links in the industrial chain will enter the stage of destocking. The situation of lithium carbonate supply shortage will be significantly alleviated.

8. Lithium carbonate import market

China has abundant lithium resources, but they are unevenly distributed and difficult to extract. Importing lithium carbonate is another channel for supply, and in recent years, China's dependence on lithium carbonate imports has gradually increased to around 30%. Chile and Argentina, as the main producing countries of lithium carbonate products, account for over 97% of China's total lithium carbonate imports, with Chile accounting for nearly 90% of the total. Nearly 80% of China's imported lithium carbonate is sourced from enterprises in the East China region, and driven by increasing demand, the proportion of imports from enterprises in Shanghai, Fujian, and Guangdong has been increasing year by year.

9. Changes in lithium carbonate prices

In recent years, the market price of lithium carbonate has shown the characteristics of a large price span and accelerated price fluctuations. Supply and demand, costs, policies, funds, and news coverage are all important factors in market price changes. Around 2015, the supply and demand of the domestic lithium carbonate industry were weak. In 2016, the gradual development of new energy vehicles drove up demand, and the price of lithium carbonate rose to around 170000 yuan/ton. From 2018 to 2020, there was an oversupply of products, and the price of lithium carbonate continued to decline, dropping to around 40000 yuan/ton in mid-2020. With favorable policies, increased consumption, and improved demand in the industrial chain, market prices began a two-and-a-half-year upward trend after mid-2020. In mid November 2022, the market price of lithium carbonate exceeded 600000 yuan/ton. Subsequently, as the terminal subsidy policy was about to end and the buyer's market replenishment sentiment weakened, the price of lithium carbonate peaked and fell back. In five months, the price of lithium carbonate fell to below 150000 yuan/ton. The price fell below the cost line and was adjusted to around 300000 yuan/ton in late April.

10. Future development of lithium carbonate

Lithium carbonate and downstream industries are relatively demand-oriented industries, and changes in the end consumer market directly affect the upstream product market in the industry chain. Looking ahead to the future, the development of terminal new energy vehicles and energy storage markets is an important factor affecting the price, profit, and supply improvement of lithium carbonate products. With the advancement of lithium resource development at home and abroad, the planned production capacity of lithium carbonate will gradually be released, and the supply structure will tend to be more relaxed; The domestic terminal new energy vehicle and energy storage markets will continue to develop in the coming years until demand reaches saturation. The export of terminal products such as lithium batteries, new energy vehicles, and energy storage batteries is another direction for demand growth. In the long run, the supply and demand structure tends to stabilize, and the fluctuation space of lithium carbonate prices is expected to gradually narrow. However, it should be noted that in recent years, the new energy industry has received high attention, and the lithium carbonate sector is also a key focus of capital attention. The market mentality has gradually strengthened its impact on prices; In addition, the speed of technological innovation in the new energy industry is constantly increasing, and alternatives such as sodium batteries and hydrogen fuel cells are developing rapidly. How the future pattern of the battery industry changes will affect the development of lithium batteries, thereby affecting the demand for lithium carbonate.