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In December 2015, we wrote a story on the boom in battery demand for electric cars in China. 331,092 of new energy vehicles were sold there in 2015, which is almost 3 times plug-in hybrid sales (114,022 vehicles) in the US for the same year. In the first months of 2016, new energy vehicle sales in China reached 35.7 thousand units, or 270% of the sales in the same period of last year. Production capacity of several raw materials such as lithium hexafluorophosphate, lithium carbonate and separator could not match the demand. As a result, the price was driven several-fold higher. This trend continues into 2016.

Lithium carbonate (Li₂CO₃), the raw material for cathode materials and electrolyte, had seen the price more than doubled last year. In March, the salt was sold at as high as $27.8 thousand/ton (or 180 thousand yuan/ton), which is another 50% increase.

Thanks to the hot market, material suppliers are doing very well. For example, Tianqi, a major Li₂CO₃ supplier in China, expects over 8 times increase in profit in Q1 (around $43 million or 280 million yuan), as compared with the same period of last year. In February, Ganfeng, another major supplier in China, announced that it plans to raise $231 million (or 1.5 billion yuan) on stock market. The fund will be used to increase the investment on Mt Marion lithium project in Australia (200 thousand tons/year of spodumene), build a 18650 battery production line as well as build a 15 thousand tons/year Li₂CO₃ plant.

Same thing for lithium hexafluorophosphate (LiPF₆), the salt in the electrolyte. The price was doubled last year already, to $40 thousand/ton (or 260 thousand yuan/ton). In March, the price increased by another 50% to $62 thousand/ton (or 400 thousand yuan/ton).

Do-Fluoride, which accounts for 30% of LiPF₆ supply in China, expects a profit of $17 million (or 110 million yuan) in the first quarter of 2016, which is a 1200% increase as compared with the same period in 2015! The company will double its production capacity to 6000 tons by end of the year. The company supplies to BYD, Shanshan and Capchem.

Do-Fluoride also makes moves down the value chain. Its annual battery production is 100 million amp-hours currently (which will be expanded to 300 million amp-hours in 2 years). Customers of its batteries include Xindayang. Do-Fluoride also controls Hongxing Auto, making electric cars.

There is huge demand on separator materials as well. Mingzhu expects its Q1 profit to increase by 200%-250% as compared with the same period in 2015. Its customers include BYD, LG, Wanxiang, ATL and Lishen. Recently, Mingzhu raised $109 million (or 708 million yuan) on stock market, mainly for building a 190 million m²/year production line.