By Han Minhua, Zhuochuang Information

China is the main producer of basic lithium salts. As of the end of the first quarter of 2022, the total domestic production capacity of lithium hydroxide was 380 800 t/a. Both domestic and foreign trade of lithium hydroxide products in China were relatively active, with export dependence exceeding 50%. From January to February 2022, China's lithium hydroxide export volume was relatively stable, with a slight increase of 4.91% year-on-year. South Korea and Japan were still the main exporting destinations of lithium hydroxide from China. China's lithium hydroxide export level has increased in March, but the room for growth was limited due to multiple factors.

The export volume of lithium hydroxide in January-February 2022 was relatively stable

According to the import and export data released by the General Administration of Customs of China from January to February 2022 (see Table 1), the export volume of lithium hydroxide in China in January was 7 214.11 tons, an increase of 13.94% over the same period last year; the export volume of lithium hydroxide in February was 4 547.98 tons. It was down 6.8% from the same period last year. From January to February, the cumulative export volume of lithium hydroxide was 11 762.09 tons, an increase of 4.91% over the same period last year. Figure 1 shows the export volume and average export price of lithium hydroxide in China from 2021 to February 2022.

Figure 1 Comparison table of China's lithium hydroxide export volume and average   price from 2021 to February 2022

Steady growth in domestic production

At the beginning of 2022, the export volume of lithium hydroxide remained high, and the steady growth of domestic production was the basic guarantee to support the high export volume of lithium hydroxide.

Since 2021, the domestic monthly production of lithium hydroxide has shown an increasing trend. Figure 2 shows the changes in the proportion of monthly production and exports of lithium hydroxide since 2021. Under the support of high production, the export volume of lithium hydroxide was basically guaranteed. At the same time, driven by the rigid demand for high-end new energy vehicles in domestic terminals, the increase of domestic orders has caused the proportion of exports to fluctuate downward. In January 2021, lithium hydroxide exports accounted for 61.77% of the output; in December, exports accounted for 51.45%, down 10.32%. At the beginning of 2022, affected by the Spring Festival holiday, some enterprises have planned maintenance or holidays, and the output has declined. The pace of resumption of work after the holiday was not fast, and the reduction in output had an impact on the export supply. From January to February, the export volume of lithium hydroxide in the proportion of the total output fell from 55.49% to 35.26%.

Judging from the registration places of export suppliers (Figure 3), the main suppliers of China's lithium hydroxide export sources were Jiangxi and Sichuan. These two provinces are areas with relatively rich lithium resources in China.

Data source: General Administration of Customs of the People's Republic of China

   Figure 3 Comparison of registration locations of Chinese lithium hydroxide exporters     from 2021 to 2022

The status of the main demand partner in the export market remained

Customs data showed that South Korea and Japan remained the main export trading partners of China's lithium hydroxide (see Figure 4). Since 2021, China's monthly exports of lithium hydroxide to South Korea accounted for more than 50%, while Japan's share has fluctuated within the range of 30% to 50%, and the number of sources exported to other countries and regions was very small.

Data source: General Administration of Customs of the People's Republic of China

          Figure 4 The proportion of China's lithium hydroxide export trading partners                  in 2021-2022

In March, the early-stage maintenance and maintenance enterprises gradually resumed production, the domestic high-nickel cathode material market demand has recovered, and the production and sales of lithium hydroxide have increased. However, in the middle and late March, the domestic inter-regional transportation difficulty increased, and downstream battery manufacturers and terminal car companies had some shutdowns, which limited the domestic consumption of lithium hydroxide and also had a certain impact on the export and transportation of goods. Overall, China’s lithium hydroxide exports will increase in March, but the increase may be relatively limited.