SunSirs: Future Demand for Caustic Soda in the Lithium-Ion Battery Industry Will Continue to Grow

In recent years, lithium-ion batteries have seen widespread application in new energy vehicles, consumer electronics, and energy storage. Industrial clusters are primarily concentrated in the Pearl River Delta, Yangtze River Delta, Beijing-Tianjin-Hebei region, and Sichuan-Chongqing region. With the rapid growth of the lithium battery industry, caustic soda—as a key auxiliary material in the industry chain—is used in processes such as the preparation of ternary precursor materials, the production of lithium iron phosphate, and wastewater treatment. Consequently, the scale of demand for caustic soda and its share of downstream consumption continue to rise.

Lithium hydroxide is a crucial raw material for the production of ternary lithium battery cathode materials. Its own preparation process consumes a certain amount of caustic soda, primarily for the purification and conversion of lithium resources. By adjusting the pH of the system, lithium is separated and purified, ensuring the final product’s purity meets the requirements for cathode material production. China’s total lithium hydroxide production capacity has reached approximately 750,000 metric tons per year, but capacity utilization rates remain low due to multiple factors. In 2025, China’s lithium hydroxide consumption of caustic soda is estimated to be approximately 300,000 metric tons.

Ternary precursors constitute an intermediate link in the ternary lithium battery supply chain. Upstream, they rely on mineral resources such as nickel, cobalt, and manganese, with liquid caustic soda and ammonia water serving as key auxiliary materials. Downstream, they correspond to ternary cathode materials, with end-use markets spanning new energy vehicles, energy storage, and consumer electronics. China’s total production capacity for ternary precursors is approximately 2.09 million tons, subject to fluctuations in end-market demand from downstream sectors such as new energy vehicles and consumer electronics. By 2025, caustic soda consumption in the ternary precursor segment is projected to reach approximately 1.15 million tons, accounting for nearly 60% of the lithium battery industry’s total caustic soda consumption and serving as the primary driver of caustic soda demand for lithium batteries.

Lithium iron phosphate (LFP) is the mainstream cathode material in the current lithium-ion battery market. Production processes are primarily divided into three methods: the solid-phase iron phosphate method, the solid-phase ferrous oxalate method, and the liquid-phase method. Among these, the solid-phase iron phosphate method dominates the market, accounting for over 70% of LFP production. In the solid-phase process, caustic soda is primarily used in the wastewater treatment stage of production to neutralize acidic substances in the wastewater and meet environmental discharge requirements. In contrast, the liquid-phase process requires large amounts of caustic soda to participate in reactions during the preparation of precursors for cathode materials, serving to regulate the pH of the reaction system. China’s LFP production capacity stands at approximately 5.3 million metric tons, with an overall low operating rate. Based on calculations considering the market share of mainstream processes and current operating conditions, caustic soda consumption in the LFP cathode material segment is projected to reach approximately 500,000 metric tons by 2025.

China’s lithium-ion battery industry accounts for 5% of apparent caustic soda consumption. As the market scale of end-use sectors such as new energy vehicles, consumer electronics, and electric bicycles continues to expand, the lithium-ion battery industry’s demand for caustic soda will continue to grow, becoming one of the key drivers of the caustic soda market.

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