Fighting for Lithium
Lithium complex grease accounts for close to 40% of the total grease demand in the US market. It’s second only to conventional lithium grease which accounts for roughly 20% of demand. Importantly, both require lithium for the thickener.
Demand for lithium has been skyrocketing with the growing global demand for electric vehicles (EVs) and electronic devices. In fact, according to a recent study McKinsey, demand for lithium ion (Li-ion) batteries is expected to grow by about 33% annually by 2030.
But although lithium (lithium carbonate and lithium hydroxide) prices started on a sharp upward trajectory in 2021 due to bullish demand and Covid related supply chain interruptions, prices slumped in the 4th quarter of 2022 and plunged in the first two months of 2023. While some analysts believe prices will stabilize, many are forecasting lithium prices have further to fall. The abrupt change in the direction of lithium prices is attributed to new supplies coming online and softening demand, particularly in China due to the phasing out of EV subsidies.
Important to the lubricants business is that although lithium prices have recently dropped, they remain significantly higher than that seen during most of 2021, and prior years. Further, while demand for EVs softened, many analysts say the slowdown will be short-lived and demand for EVs, and therefore Li-ion batteries will be back on a robust growth curve in the near to long term. Assuming these predictions come to fruition, grease manufacturers will likely see competition for lithium supply intensify, and prices increase as demand for lithium going to EVs and other electronic devices grows.
With that as a backdrop, there is little wonder why Lubrizol is exploring cost-effective alternatives to lithium based industrial grease-thickeners.