Summary: Recently, the price of LiPF₆ in China continues to decline mainly due to the gradually increasing production capacity of new LiPF₆ projects and a weaker demand for LiPF₆ than expected.

Recently, the price of lithium hexafluorophosphate (LiPF₆) in China has continued to decline. CCM believes that the reasons are as follows:

1. The newly added production capacity has good performance, effectively alleviating the previous tight supply situation.

Since the end of 2021, the newly added 5,000 t/a LiPF₆ of Do-Fluoride New Materials Co., Ltd. (DFD), the new 6,000 t/a LiPF₆ of Zhejiang Yongtai Technology Co., Ltd., and the newly added 20,000 t/a LiPF₆ (60,000 tonnes liquid LiPF₆) of Guangzhou Tinci Materials Technology Co., Ltd. and some others have good performance in releasing, effectively easing the previous tight supply situation. In 2022, new production capacity will be successively put on the market (see the table below).

It is worth noting that production capacity does not exactly equal supply. For example, although DFD will have a production capacity of 55,000 t/a by the end of this year, it is expected to ship 35,000 to 40,000 tonnes this year, mainly because part of the production capacity will be implemented at the end of this year, and the company needs time to gradually increase its production capacity till full production.

2. Domestic demand for LiPF₆ is lower than expected.

In Q1 2022, DFD said that the company's overseas major customers' demand for LiPF₆ increased significantly, and the domestic customers' demand declined compared with the most optimistic expectation in the previous period. The overall reduction of domestic customers is about 5%-10% of the annual demand, which may be an epitome of the current domestic market.

In April, the epidemic swept across China, with Shanghai and Northeast China being hit hardest. Electric vehicle factories in Shanghai, Northeast China and other places have stopped or reduced production, resulting in an abrupt drop in market demand for LiPF₆. Poor logistics have slowed down the purchase of LiPF₆ by downstream companies, and the price of LiPF₆ has been dropping. At the same time, the high price of lithium carbonate has also suppressed the operating rate of downstream small and medium battery factories to a certain extent, and the demand for LiPF₆ in the market has also been suppressed.

3. There are many low-priced long orders in LiPF₆ market, and the difference between the prices of long and short orders also provides room for price reduction.

A notable feature of LiPF₆ market is the dual price system. Many manufacturers lock in long orders, the price of which is generally much lower than the market spot price. Battery factories are forced to depress prices of upstream materials, but the current prices of cathode and anode materials have no room to decrease. However, in the electrolyte market, especially when a certain price elasticity of LiPF₆occurs, battery factories find every chance to depress price, leaving the current electrolyte and LiPF₆ market under price pressure. Recently, the spot price of LiPF₆ has continued to decline due to the reduction of bulk orders.

Table China's expected LiPF6 capacity in 2022

More information about this article can be found at CCM Li-ion battery China monthly report.