[Exclusive] Boomerang of Dependence on Chinese Raw Materials... Import Value of Secondary Battery Lithium Hydroxide Doubles

Major Raw Material Imports from China
Dependence Still Over 80% Despite Decline
Price Increase in Core Materials for Automobiles and Secondary Batteries

The import value of key raw materials used in automobiles, semiconductors, and secondary batteries from China has more than doubled in the past year. In particular, the import value of lithium hydroxide, a core material for secondary batteries, reached $268.84 million in the first quarter of this year, accounting for half of last year's total import volume. There are concerns that the higher the dependence on China for imported items, the more difficult it is to diversify supply sources amid rising unit prices, which could increase the production cost burden on domestic industries.

According to the "2022 First Quarter Major Raw Material Import Status from China" obtained through the Korea International Trade Association on the 2nd, the import value of raw materials with over 80% dependence on China, considered key materials for domestic manufacturing industries such as magnesium, tungsten oxide, neodymium permanent magnets, and lithium hydroxide, totaled $399.59 million, a sharp increase of 110.7% compared to the same period last year ($189.64 million).

Specifically, the import value of magnesium ingots used in manufacturing automobile bodies, smartphones, and aircraft parts surged 220.5% to $23.21 million in the first quarter compared to $7.24 million last year. The import scale of lithium hydroxide also reached nearly half (48.4%) of last year's total import value ($555.11 million) in just one quarter. The import values of neodymium permanent magnets used for electronic product lightweighting and tungsten oxide used in semiconductors and high-strength steel also increased to $85.93 million (up 71.8%) and $21.60 million (up 26.4%), respectively.

During this period, the share of imports from China for these items slightly decreased but still remained high: magnesium ingots at 99.9% (down 0.1 percentage points), neodymium permanent magnets at 87.0% (down 0.3 percentage points), tungsten oxide at 80.2% (down 19.6 percentage points), and lithium hydroxide at 74.1% (down 13.4 percentage points). Despite reductions of up to nearly 20%, the overall import share from China still exceeds 80% for these materials.

The problem is that China has begun fully implementing a 'weaponization of resources' strategy through export controls on key raw materials, raising concerns that incidents like last year's urea solution crisis could recur at any time. The Korea International Trade Association reported that as of the third quarter of last year, among 3,941 raw material items with over 80% import dependence on a single country, 1,850 items (46.9%) rely on China, highlighting the need to diversify supply sources.

Professor Jeong In-gyo of Inha University's Department of International Trade warned, "Currently, it is difficult to develop new substitutes or technological changes for major raw materials imported from China in the short term," adding, "Short-term shortages and price increases are inevitable."

This content was produced with the assistance of AI translation services.