Lithium Hexafluorophosphate (LiPF6) Production Capacity, Demand, Pricing and Market Outlook

Lithium Hexafluorophosphate (LiPF6) Market Size, Price

Buoyed by the clean energy transition, a global sustainability shift, and enticing legislative incentives & concessions, electric vehicles (EVs) have seen exponential growth in recent years, increasingly prompting drivers to jump on the bandwagon. In 2017, EV sales globally touched the 1 million mark, by 2023 the figure had already crossed 10 million. What ensued from this remarkable surge was the demand explosion for all EV components. Longer life spans and high energy density propelled the use of lithium-ion batteries (LiBs) in EVs, and demand for all its components concomitantly rose: from cathode materials like lithium to anode materials like graphite to battery electrolyte materials like solvents & salts.

lithium hexafluorophosphate (LiPF6) Demand Analysis:

As a critical upstream raw material for electrolytes used in LiBs, lithium hexafluorophosphate (LiPF6) was not exempt from this. When combined with solvents & additives, this salt forms battery electrolytes facilitating ion transfer between electrodes. LiPF6 usage in rechargeable LiBs has skyrocketed alongside the EV revolution; with the power battery segment now representing the biggest share of its global consumption pie. Sizeable volumes of LiPF6 are also used in energy storage batteries and in consumer electronics.

China has been, and continues to be, at the forefront of EV production, wielding overwhelming dominance in battery production. This naturally led to a demand surge in China, especially for products like LiPF6. The country also has a competitive advantage with respect to raw materials: it has over 7% of the world’s identified lithium reserves (per the U.S. Geological Survey) and refines around half the global lithium. A situation of outstripping demand, coupled with attractive market prospects brought in several new players into the LiPF6 market, also encouraging several existing producers to augment their domestic production capacities. Such was the extent of this, that what was earlier a supply shortage quickly threatened the industry of an oversupply situation.

lithium hexafluorophosphate (LiPF6) Capacity Analysis:

The growing EV production, however, both domestically and overseas, managed to absorb the excess supply. Prismane Consulting’s LiPF6 database indicates China constitutes nearly 95% of the global production today, with majors like Tinci Materials, Do-Fluoride New Materials, and Jiangsu Xintai Material securing long-term agreements with domestic EV producers such as BYD. Meanwhile, EV producers in the Americas, Europe, and the Asia Pacific rely on imports from China. Looking ahead to 2024, Chinese producers are expanding their LiPF6 capacities, with several new plants scheduled to commence operations in the coming years. Driving these continued investments is the sizeable export potential the country eyes, with producers already enjoying increased orders from overseas in the last five years.

lithium hexafluorophosphate (LiPF6) Demand Analysis:
However, there is a catch: producers globally are increasingly worried of the growing divide, and intend to reduce Chinese reliance. Efforts are already underway in various countries, with several players venturing into commercial production. Some of these projects are already coming to fruition. In February 2023, Koura, part of Orbia, inked a technology licensing agreement with Kanto Denka Kogyo, a LiPF6 producer based in Japan. Aiming to secure North America’s battery materials supply, Orbia will build the plant at St. Gabriel, Louisiana, and it will be the region’s first large-scale production facility. Koura’s proposed plant will produce 10 kilotons of LiPF6 every year, with operations scheduled to commence by 2026. Koura was selected by the U.S. Department of Energy for a USD 100 million award in 2022.

Chinese producers are also venturing overseas, with Tinci Materials Group announcing a $280 million investment in August 2023 to build a plant in Morocco. The conglomerate had previously planned to set up the facility in the Czech Republic, however decided to relocate the project citing “unfavorable circumstances”. The plant construction is anticipated to complete after 24 months.

Heavy reliance on LiBs from overseas and lack of sufficient battery material supply has weighed on India EV production, driving up costs. Nevertheless, India today is a ripe target market for the EV infrastructure, with several global players eyeing production setups, buoyed by recent discoveries of lithium reserves. In the LiPF6 sector, companies like Neogen Chemicals and Gujarat Fluorochemicals Limited (GFL) are already investing in production facilities, leveraging their first-mover advantage.

GFL's recent announcement entering February 2024 with the groundbreaking of its LiPF6 project in Dahej, Gujarat, aims to mitigate import reliance and address cost bottlenecks, with plans to supply over 200 GWh annually of EV and storage system battery solutions. Manufacturers anticipate this initiative to cater to both local demand and create opportunities for overseas market penetration. Concurrently, industry players are increasingly investing in backward integration, aiming to produce most materials in the supply chain domestically, except for LiPF6 raw material lithium carbonate, which is not currently mined in India and is imported. Accordingly, players have signed multi-year contracts with lithium carbonate manufacturers to ensure stable supply.

Legislative impetus is undoubtedly a major factor in driving these domestic investments in India. Schemes like Production-Linked Incentive (PLI), a performance-linked incentive from the Government of India (GoI) is aimed at reducing’s foreign imports & scale up domestic manufacturing. By establishing relationships with domestic battery manufacturers that are also benefactors of such schemes, Indian players in the battery materials space are positioning themselves in the market. Besides encouraging new investments, such initiatives will also safeguard domestic sales of LiPF6 producers in India, despite China augmenting its domestic & overseas supply.

Although many may be eyeing the ripe situation, companies with a background in lithium or fluorine will possess a competitive advantage. Unlike other industries, entering these markets will prove challenging for newcomers. From a Chinese perspective, investments in India's battery space sector are more likely to materialize via collaborations, given India's intrinsic regulatory landscape for Chinese entities lacking domestic presence. That said, it cannot be denied that Chinese and Japanese players hold a technological and backward integrated edge. Should they aggressively pursue the Indian markets, it could potentially threaten domestic market shares.

Meanwhile, a new contender for LiPF6 is around the block: lithium bis(fluorosulfonyl)imide (LiFSI). LiPF6 presents limitations such as poor performance in both low & high temperatures, a harsh preparation process, and inadequate thermal stability. LiFSI has the potential to address majority of these bottlenecks, not just due to its better physical & chemical properties, but also due to the continuous investments from Chinese firms in its research & development. Presently, LiFSI is mainly used in small quantities as an electrolyte additive mixed with LiPF6. 

Several major Chinese players are investing in new supply for LiFSI besides LiPF6 plants. The primary hindrance to widespread adoption of LiFSI is its high application cost, although analysts anticipate that maturing technology will address this bottleneck. The price disparity between the two is gradually narrowing. Notably, EV giant Tesla is already employing LiFSI salt into its 4680 batteries. Companies like Contemporary Amperex Technology (CATL), Panasonic, and LG Chem are actively involved in the production of these batteries, having inked sourcing agreements with domestic LiFSI manufacturers in China.

lithium hexafluorophosphate (LiPF6) Market Forecast:

With EV production showing no signs of slowing down, global LiPF6 demand is set to rise. Efforts to diminish reliance on Chinese supply will materialize, although the scale of this endeavor remains uncertain; replacing more than 90% of the supply will not be easy. Indian producers stand at a pivotal juncture, with production still in its infancy and few players in the field. 

Forthcoming years will witness the entry of new players, and collaborative efforts will ensure self-sufficiency and even potentially lower EV costs. For India, this holds significant export potential, with the capacity to supply volumes to EV manufacturers worldwide seeking to reduce their dependence on Chinese sources.

Globally, the market will juggle between oversupply & shortages, with price movements continuing to be directly influenced by the lithium carbonate supply chain. Amidst this landscape, LiFSI, a newer and superior material, is in its early stages of adoption, with increasing investments pouring into its production and research and development. 

Overall, interesting times lie ahead for the LiPF6 market and the battery materials sector as a whole.

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