Sustainable Practices in the Lithium Hydroxide Market: A Deep Dive
Lithium hydroxide (LiOH) is an inorganic compound majorly used in the manufacture of lithium-ion batteries that power electric vehicles, portable electronics and energy storage systems. It is essential in the production of cathode materials such as lithium cobalt oxide and lithium iron phosphate. The rising adoption of electric vehicles along with increasing penetration of consumer electronics is compelling battery manufacturers to substantially hike lithium hydroxide production.
The global Lithium Hydroxide Market is estimated to be valued at US$ 2.13 Billion in 2024 and is expected to exhibit a CAGR of 8.4% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
The growing demand from batteries is considered as a major market opportunity for lithium hydroxide. Lithium-ion batteries have emerged as the primary power source for a wide range of consumer electronics and electric vehicles. With automakers aggressively pushing the production of electric vehicles to comply with stringent carbon emission norms, the demand for high-performance lithium-ion batteries is projected to multiply considerably in the upcoming years. Since lithium hydroxide serves as a key raw material in the manufacturing of cathode for lithium-ion batteries, its consumption is anticipated to rise substantially to meet the spiraling demand from the booming EV and consumer electronics industries. This rising demand from batteries offers lucrative prospects for lithium hydroxide market players over the forecast period.
Porter's Analysis
Threat of new entrants: The lithium hydroxide market has moderate threat of new entrants due to high capital requirement for setting up production facilities and presence of established players. However, growing demand provides opportunities for new players.
Bargaining power of buyers: Buyers have moderate bargaining power due to availability of substitutes and differentiated products from various producers.
Bargaining power of suppliers: Suppliers have high bargaining power due to limited number of lithium producers and dependence of end-users on few suppliers for raw materials.
Threat of new substitutes: Threat of substitutes is low as lithium hydroxide has limited substitutes and is primarily used in lithium ion batteries which have no close substitutes.
Competitive rivalry: The market has high competitive rivalry due to presence of major players competing on pricing and product differentiation.
SWOT Analysis
Strengths: Growing demand for lithium ion batteries from electric vehicles and energy storage sector. Established supply chain and distribution channels.
Weaknesses: Volatility in lithium prices affect profit margins. Heavy dependence on Chinese suppliers for raw materials.
Opportunities: Rising investments in energy storage applications and fast charging infrastructure creation. technological advancements reducing costs of lithium ion batteries.
Threats: Trade wars and geopolitical issues can disrupt supply chain. slower economic growth may dampen electric vehicles demand.
Key Takeaways
The global lithium hydroxide market is expected to witness high growth. The market size for 2024 is estimated at US$ 2.13 Billion and forecast to reach US$ 3.57 Billion by 2031 at a CAGR of 8.4% during the forecast period from 2024 to 2031.
The Asia Pacific region dominates the global lithium hydroxide market with a share of over 60% in 2024. This can be primarily attributed to the presence of leading lithium-ion battery producers and electric vehicle manufacturers in countries like China, Japan, and South Korea. Countries like China, Japan and South Korea are major consumers as well as producers of lithium hydroxide.
Key players operating in the lithium hydroxide market are FMC, SQM, Rockwood Lithium, Leverton-Clarke, Kongpo Group, Jiangxi Ganfeng Lithium, Jinniu Power Sources Material, Sichuan Brivo Lithium Materials, and others. FMC is the largest lithium hydroxide producer globally with production facilities located in Argentina and China.
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