A Lithium Investor Must Read - Q&A from ALB, page-2

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Operator
Thank you. The next question comes from Joel Jackson, BMO Capital Markets.
Joel Jackson -- BMO Capital Markets -- Analyst
Hi, good morning. One of your larger bromine competitors spoke about bromine for them over-earned in Q2. They were expecting lower earnings in the second half of the year. You seem to be modeling more to a flat to up bromine earnings in the second half of the year. Can you give little more color on that, anything happened in Q2, a little bit stronger? It doesn't seem like for your business.
Luke Kissam -- Chairman, President & Chief Executive Officer
Yeah. If you look at it, I don't know what happened with one of our competitors, but what we're looking at now is relatively flat second half versus first half in bromine from a bottom line standpoint. I don't see anything. If we had -- it all comes down honestly to the amount of product we're able to get out because we're sold out, and it's how our assets run. And if our assets run better, that may move us a little bit to the upside of our range; if it -- if they don't operate as well, that may move us to the lower side of the range. But to us, it's all in the second half, if the markets stay -- market conditions remain similar, which what it appears to do, it's all about our ability to execute and run those sites.
Joel Jackson -- BMO Capital Markets -- Analyst
And I apologize if this question was asked earlier, but Luke, Eric, we all see the daily, the weekly, the monthly spot Chinese carbonate prices falling. There is a question about how good the information content is in that data. Can you maybe comment on that? Is there any connection between those data points and what you would see in your contract pricing in the next -- you've answered some of this, but is there any informational content really in that data?
Luke Kissam -- Chairman, President & Chief Executive Officer
Yeah. I don't look at it. I mean, the only time I bring it up is whenever you guys ask me about it, and I have to go ask somebody what the Chinese spot price has done because it's really irrelevant. What's relevant to us is what's the cost that makes our customers -- gives them the value that they're willing to pay for and gives us the return that we need to invest the capital. So we're -- I'm the wrong guy to talk about spot pricing in China, and well, it's relative or anything else, because I just -- I never look at it.
Joel Jackson -- BMO Capital Markets -- Analyst
Thanks.
Operator
The next question comes to -- from Kevin McCarthy, Vertical Research Partners.
Kevin McCarthy -- Vertical Research Partners -- Analyst
Yes, good morning. I was wondering if you could provide an update with the progress on your contract negotiations with cathode manufacturers. I think in the past, you had expressed a goal of converting about 80% of the contracts by the first quarter of '19. Is that still the case and perhaps you could elaborate on the various contract features that you're seeking and how that's been received by your customer base?
Eric Norris -- President, Lithium
Hey, Kevin, this is Eric. I think just to repeat what I recall I was saying, we indicated that this was an important year because we had some -- contracts nationally maturing, and others where we -- either ourselves or the customers proactively approaching us for contracts that weren't maturing, that wanted to be, for one party, that are extended longer term. And for us, that's beneficial obviously, so we can plan the production. So how that's going? We have a few more contracts that we've closed. Those terms are moving out to the middle of the next decade by and large, it -- the terms by the contract, but that's -- we're moving beyond five years whereas in the past I think we've indicated three to five years. Yet we still have more to go, right. I think we indicated this will be an important year and we're making great progress thus far and we, clearly from what we're seeing, continue to expect to see similar progress going forward. The terms of these aren't different than what we described before, right. There is a component of a floor price, minimum volume, a right of first refusal on additional volumes based upon the customers' growth, openers that are bidding, not the customers, and a return that gives -- a price that results in a return that's 2x our cost of capital on an after-tax basis. So that's -- those are -- all those elements are still in place. What's really changing is the length of that term and obviously -- and the volumes are getting larger for those customers as well. And we'll, by the end of the year, likely therefore in our fourth quarter call, in the beginning of '19, be able to give a more thorough update on all of those matters.
Kevin McCarthy -- Vertical Research Partners -- Analyst
And then as a follow-up, how would you compare and contrast demand for hydroxide versus carbonate? One of your peers seems to be seeing a mix shift toward hydroxide. Is that something that you observe as well? And if so, what might be driving that and how sustainable might it be in your judgment?
Eric Norris -- President, Lithium
Well, given our size and our position in carbonate, we have the -- I'll say, the opportunity to serve both markets, right? So that may be where we differ by some of our peers. We have a significant carbonate and we're building a -- have and are building an even more significant hydroxide capacity. As you know, Kevin, the plan for building capacity has us building more hydroxide capacity going forward than carbonate, and that's because we're starting from a smaller base. And that is also true of the market. The market for hydroxide overall, outside of Albemarle is smaller, and the demand growth therefore is growing off a smaller base.
In terms of what's happening at the customer, as I indicated in an earlier question, we're seeing demand for both. Now, what we are seeing certainly, and this is we haven't had a question about Chinese EV policy, but in China, we're seeing a clear move to nickel chemistries, and we -- it's very likely that we'll see an uptake in hydroxide needs for what's going on in China, for they're putting their EV infrastructure and vehicles in place. So -- but all that being said, the contract commitments we have that go out to the -- even into the next decade are pretty balanced between carbonate and hydroxide, and it really does depend on the cathode or battery manufacturers' infrastructure, the know-how they have in place to process, and therefore the preference they have for one or the other.
Kevin McCarthy -- Vertical Research Partners -- Analyst
It's helpful. Thank you.
Operator
The next question comes from Aleksey Yefremov of Nomura Instinet.
Aleksey Yefremov -- Instinet -- Analyst
Good morning. Thank you. I'm sorry to come back to the China question. I recognize that you don't have exposure to China spot lithium market, but can you offer us your view of what is going on in that whole lithium to EV value chain? Is there anything that you see that has implications for EV sales in China and then therefore global demand for lithium?
Luke Kissam -- Chairman, President & Chief Executive Officer
Yeah. I really -- the only thing that I could hypothesize is that there is some lower grade carbonate that's in China that when you look at the Chinese regulations moving to a longer storage and a longer battery, is having a tough time finding a place in the marketplace for EV because it won't meet that standard for that longer draw out time under the new regulations in China. And somebody -- so it's of less value and somebody is trying to find a spot for. If you -- that's the best I can offer there. I don't think it's going to have any impact at all on our business.
Aleksey Yefremov -- Instinet -- Analyst
Got it. Thank you, Luke. And then staying in China on Xinyu II, what could be the benefit in terms of volume next year? Should we think of the ramp of Xinyu II as just offsetting some of the tolling volume that you have next year, or will this be incremental to the tolling level that you have this year?
Luke Kissam -- Chairman, President & Chief Executive Officer
It's going to be incremental, and so at full rates, it would be 20,000 metric tons on an annual basis. I don't think we can expect it to start up and sell that 20,000 met tons and run that way. So is it going to be -- we'll have a better handle around the second -- the next call, but my expectations would be if we get something around 15,000 or something like that out of that plant next year, that'd be good operations, assuming that they get commissions started on the back end of that during the fourth quarter, I would hope. That may be a stretch, but I hope we'd be able to do that.
Aleksey Yefremov -- Instinet -- Analyst
Understood. Thank you.
Operator
Okay. The next question comes from Sebastian Bray of Berenberg.
Sebastian Bray -- Berenberg -- Analyst
Good morning and thank you for taking my questions. I would have three please. The first is on the extent of coverage of your volumes with longer-term contracts. Could you please give an idea of what percentage of your volumes are booked out for the next two to three years with longer-term contracts? I think the target from memory was about 50% by the end of this year. The second one is more on the use of -- or pardon me, is more on the development of lithium demand this year. Do you have enough visibility now to say that you would expect the market to grow by, let's say, 20% or potentially even more percent? In absolute terms, would this be about 260 kilotons to 270 kilotons?
And lastly, a question on catalysis. This business, as I think has been mentioned in a previous question, people were typically thinking of low single-digit growth for. Suddenly, it has grown by over 10% volumes. Is this a catch-up effect? Is it some pre-stocking ahead of IMO legislation? Could you elaborate a bit please on why this business has grown as pleasingly as it has in Q2?
Luke Kissam -- Chairman, President & Chief Executive Officer
Okay. Let me take the first one. On the coverage on our long-term agreements over the next two to three years, that's probably going to be 95% plus from what we can produce. Next year, as we said, we are going to have to rely on tolling as well. So we're selling more than we can produce internally because we're still relying on tolling. Our goal long-term is to be right around 80%, but we won't get there until -- in -- sometime early in the next decade, if you look -- I would assume. On the demand, Eric, do you want to talk [ph] a little bit about that, please?
Eric Norris -- President, Lithium
Yeah. So I mean, I think -- I'm trying to remember what we said in the past, so with -- and the industry prognosticators often say, but it's a growth that's sort of in that neighborhood of 20% year-on-year. It's sort of the expectation maybe going forward. Now, I can tell you that this year the demand growth, from what we see, looks stronger than that on a percentage basis. And it's coming -- Luke in his script referenced a near doubling of the EV demand, there is demand that's coming from other places like e-buses, there is demand coming from even industrial applications with a strong global economy. So we're seeing demand that could put us close to 50,000 metric tons year-over-year on a market that last year we indicated, by our estimates, was 220,000 metric tons. So that's a stronger growth than we would have thought at the beginning of the year.
Luke Kissam -- Chairman, President & Chief Executive Officer
And then if you look at Catalysts, I would view it -- when you look into this year-over-year growth, you got to get it back at 2017. And if you go back to 2017 and look at Catalysts from a full-year basis, on a -- we would have been up -- we would have been down year-over-year. So 2017 was weaker than 2016. So 2018, if we're high single digits, we catch back up and we may a little bit -- may be a little bit ahead or a little bit down. So overall, as we've talked about, this is a lumpy business. FCC is more consistent; the CFT market in hydroprocessing catalysts, based on customer mix and product mix, and whenever they turn around, you have different costs based on where you are in that turnaround cycle. So it happens to be this year that we're up after down there -- year -- last year. Overall, when you look at it over the course of five to 10 years, I would still expect that kind of 3% growth is where we'd end up on a CAGR basis.
Sebastian Bray -- Berenberg -- Analyst
All right. Thank you very much.
Operator
The next question comes from Arun Viswanathan, RBC Capital Markets.
Arun Viswanathan -- RBC Capital Markets -- Analyst
Great. Thanks. Good morning. Just wanted to ask about the costs you're experiencing in Lithium. How would you characterize the cost curve over the last year, and what's your outlook over the next year? I mean, have you seen any material changes to cash costs for yourself and do you see those rising over the next year?
Scott Tozier -- Executive Vice President & Chief Financial Officer
If you look at cash costs at plants, I mean, there are always year-on-year inflationary impacts, but if you looked at that and productivity and then look more broadly at the competitive set, the combination of cost curves -- our cost position in the cost curve and our relative -- position relative to competitor doesn't change. We're still on the left hand side of the cost curve for carbonate with brine and similarly with hydro -- with rock for hydroxide. Now, you have to also consider -- what you are going to see in our results is the royalties -- the royalty structure, which also affects our cost structure. So now we're -- at current volume prices, we're at the high end -- at the very high end of that royalties curve or tier. So you will see times (inaudible) basis where our costs are high because of that component, but all other components are largely as expected or similar to previous.
Arun Viswanathan -- RBC Capital Markets -- Analyst
Okay, that's helpful. And just two more quick ones. So first on pricing, when you see the high single digit price increase for this year kind of go through, does that bring your average pricing kind of more in line where it should be, or do you still have more rollovers that would drive further price gains next year?
Luke Kissam -- Chairman, President & Chief Executive Officer
Yeah. We've still got a few rollovers, but I mean -- the only thing I would characterize is -- I wouldn't characterize this as not in line. It's fine, in line with where we are, but when you see these contracts renew, there is some opportunity for some adjustments in price, but it will be -- as we've talked about with, I think it was Jeff Zekauskas' question, what we'll see next year is more of a volume story than a price story, and that's what you see as we bring this new capital in line, still some opportunities in price, but really, really it's more a volume story.
Arun Viswanathan -- RBC Capital Markets -- Analyst
Great, thanks. And last one is just the -- Tianqi recently announced that they're investing a little bit more to increase some spodumene production in Australia. I think it's like 1.8 million tons or so by 2021. Would you get any off-take from that, or is that something that we could look for you to grow further in or is that not a market for you guys?
Luke Kissam -- Chairman, President & Chief Executive Officer
No, under that -- so that -- it was actually Talison, not Tianqi. Tianqi is our partner. Talison made the announcement, and this was part of what's enabling the growth plan that we have that we've described. It's not on the current earnings deck, but certainly in our website. The -- expanding lithium conversion capacity chart we have in Wave 1 and Wave 2. And under the bylaws and the relationship we have, any increase in off-take, we get half of and Tianqi gets the other half. So this doesn't go when market goes to us and enables that Wave 1 and there'll be a continued plan toward Wave 2 capacity expansions as well.
Arun Viswanathan -- RBC Capital Markets -- Analyst
Okay. Thanks.
Operator
The next question we have is from Mike Sison of KeyBanc.
Michael Sison -- KeyBanc Capital Markets -- Analyst
Hey guys, nice quarter. Luke, you kind of opened up and talked a little bit more positively again on EVs. Can you maybe just update us on your outlook for lithium? Has it increased since the beginning of the year, and to what degree, and you had a lot of nice highlights on what you think the demand should be at the beginning of the year -- beginning of the call?
Luke Kissam -- Chairman, President & Chief Executive Officer
Yeah. No, if you look, our demand model remains fairly consistent with what we talked about earlier. And if you remember at one of our -- at our previous calls, and in some of our decks that we've got online and we've used that, some of the seminars that we've been to, in 2025, we're seeing a total demand of around 800,000 metric tons. Transportation would amount to 550,000 met tons of that; consumer electronics, 110,000, and all other industrial uses about 140,000 metric tons. So we haven't changed in that, although what I was trying to point out is the data that we've seen, the demand from our customers, the steps taken by our customers' customers committing the capital is all consistent with that demand model that we laid out early this year. So during the course of this year, we've gotten even more confident in our demand model and even more confident in the growth that we anticipate between now and 2025.
Michael Sison -- KeyBanc Capital Markets -- Analyst
Great. Then as a quick follow-up, but there still seems to be some concern that lithium pricing could significantly fall over time. Do you see a scenario where your contract pricing can fall significantly over the next couple of years?
Luke Kissam -- Chairman, President & Chief Executive Officer
No.
Michael Sison -- KeyBanc Capital Markets -- Analyst
Great. Thank you.
Operator
Thank you. The next question comes from Vincent Andrews of Morgan Stanley.
Vincent Andrews -- Morgan Stanley -- Analyst
Thank you, and good morning everyone. Just a couple of quick ones. Scott, the cash flow from operations guidance stayed flat even though EBITDA, you took the bottom end and the high end up. I did see some comments in the release and such about raw materials. Is this just a working capital build or what's the story there?
Scott Tozier -- Executive Vice President & Chief Financial Officer
Yes. Vincent, this is primarily driven by -- given that earnings up, our revenues up as well, so we have a bit more working capital. Obviously that's going to be a bit of a drag on our cash flow. So that's really how it reflects.
Vincent Andrews -- Morgan Stanley -- Analyst
Okay. And then just, I've been reading some things about workers' strikes in Chile, maybe more for BHP and others, but is that something that you're concerned about at all?
Luke Kissam -- Chairman, President & Chief Executive Officer
We are not concerned at all. In fact, we recently just negotiated all of our union contracts for another three years. So we feel like we're in great shape, have a wonderful working relationship with our employees, both in the Salar, in Santiago and La Negra. There is a lot of activity down there right now. So working with them together to get that contract -- get those contracts renewed took a lot of great leadership from both the employees' side on the unions and ours. So kudos to all of those guys.
Vincent Andrews -- Morgan Stanley -- Analyst
Okay. Good to hear. Thanks very much, guys.
Operator
The next question comes from Mike Harrison of Seaport Global Securities.
Mike Harrison -- Seaport Global Securities -- Analyst
Hi, good morning. You mentioned in Catalysts that the FCC prices had moved a little bit higher. Can you just give us a little bit more detail on what you're seeing in the FCC pricing environment and your utilization rates in FCC right now?
Raphael Crawford -- President, Catalysts
Sure, Mike. This is Raphael. FCC utilization rates are fairly high right now. They're actually for -- for the major players, it's very high. In China, utilization is lowered by Chinese FCC producers, but overall, it's a good market for FCC given where utilization is. That's been favorable for pricing. We've seen pricing trending upwards in most of our established markets, and I think that's a good sign. A lot of -- pricing is a function not just of utilization rates, but it's also of the value you can deliver to your customers, and we are fortunate to have good technical products and technical people to help sell those solutions to our customers.
Mike Harrison -- Seaport Global Securities -- Analyst
And was also hoping, Raphael, that you could break out the 16% volume growth that you saw year-on-year in Catalysts. What were the separate volume growth rates for FCC versus HPC? Thank you.
Scott Tozier -- Executive Vice President & Chief Financial Officer
So it's Scott. Yeah, so Mike, we don't normally split those out, but we saw a volume growth in both businesses.
Mike Harrison -- Seaport Global Securities -- Analyst
Thank you.
Operator
The next question comes from Jim Sheehan of SunTrust.
Jim Sheehan -- SunTrust Robinson Humphrey -- Analyst
Good morning. Thanks for taking my question. Could you talk about lithium margins over the next, say, in 2019? You have shifting and moving parts throughout the year. How should we think about the seasonality or cadence of margins quarter-by-quarter?
Luke Kissam -- Chairman, President & Chief Executive Officer
Yeah. This is Luke. We look at it normally on an annual basis because if we've got -- you got a plant that's running 40,000 met tons, and you shut it down for a week or two or two weeks for something, you can see a change. So what I would say is what we've always said. We expect these margins will be north of 40%. And we believe we'll be able to hold that well into the future. If we look last year, I think our overall lithium margins on a EBITDA basis were roughly 43% to 44% on around, and if I look at it this year, first quarter was kind of 44%; second quarter was 45%. So we're kind of right on where we said we're going to be. I think overall for the full year, you'll see similar margins that we saw in the first quarter and I'll expect as we get out in 2019, we would see similar type margins.
Jim Sheehan -- SunTrust Robinson Humphrey -- Analyst
Great. And on the IMO fuel standards for marine fuels, are you seeing any impact in your business this early, any impact on demand or pricing or is that something that is going to ramp slowly over time as the regulation is implemented?
Raphael Crawford -- President, Catalysts
So Jim, we haven't seen -- this is Raphael. We haven't seen any impact of that yet, and -- to your point. I think it'll ramp slowly over time. It's an overall trend in the industry toward lower sulfur transportation fuels, not just in marine, but around the world, but it's a slow ramp.
Jim Sheehan -- SunTrust Robinson Humphrey -- Analyst
Thank you.
Operator
The next question comes from Chris Kapsch of Loop Capital Markets.
Chris Kapsch -- Loop Capital Markets -- Analyst
Yeah. Good morning. My questions are follow-ups around the increased activity with tollers. I guess tolling has always been part of the mix, and I think indeed it was a tolling relationship with Jiangxi Jiangli, which ultimately led to the acquisition of at the time what was probably one of the best converters in China. So the questions are, a couple of things. One, are these tollers that you're working with now, are they totally focused on battery grade lithium products and you're comfortable with them hitting those specs? And then given that these tolling pounds are part of the mix, is it having any sort of dampening effect on margins currently? And if that's the case, as you expand your in-house conversion capacity and shift more of that volume back in-house, will that have an influence on the margin outlook?
Eric Norris -- President, Lithium
Hey, Chris. This is Eric. So with regard to tolling, we -- as you know, we qualify and spend a lot of time working in getting the right tollers. We make sure we're working with folks we know and believe [ph] have the right quality. All that being said, it is not used in battery grade products, right. We use this largely for technical grade product lines or customer relationships that we have. As we've said often on, over the past couple of quarters and years, we'll continue to use that as swing capacity as we bring on plants and bring off to support ourselves because it is a lower margin business, right. It does have a margin dampening effect.
And you're seeing a little -- and we expect a little bit of that in the coming quarter, right. We will have tolling volumes, it's offsetting some of the lack of volume we otherwise would have had coming out of La Negra because we're having a tie-in at La Negra. So yeah, our expectation is you'll probably see more of a margin impact from what goes on and a sales impact with La Negra because of that tolling phenomenon and bring [ph] that -- swing capacity that we bring on to buffer the situation.
Chris Kapsch -- Loop Capital Markets -- Analyst
That's helpful. And then just as a follow-up, I mean, given that most of these relationships are not focused on the battery grades, and -- is it fair to assume then that you -- the strategy will be to build out organic in-house conversion capacity as opposed to considering maybe another converter acquisition?
Luke Kissam -- Chairman, President & Chief Executive Officer
We will look at that as it comes, and it depends upon what the timing is, it depends upon what the capability of that toller is, and it depends upon what the return on invested capital would be, so -- and what we would have to invest in there. So it -- we look at that obviously, but the returns got to be right for us to do an acquisition, given where we are from an organic. And as we look at it as well, we've talked about the importance of having assets within China and outside of China because within China, any export of lithium hydroxide has a 17% non-recoverable VAT, and we just want to be sure we can service our customers efficiently and effectively outside of China and inside of China.
Chris Kapsch -- Loop Capital Markets -- Analyst
That's helpful. Thank you.
Operator
Thank you, ladies and gentlemen. That concludes the presentation. You may now disconnect. Thank you for joining, and have a good day.
Duration: 62 minutes
Call participants:

Dave Ryan -- Vice President, Corporate Strategy and Investor Relations
Luke Kissam -- Chairman, President & Chief Executive Officer
Scott Tozier -- Executive Vice President & Chief Financial Officer
Dylan Campbell -- Goldman Sachs -- Analyst
Eric Norris -- President, Lithium
Scott Goldstein -- Citigroup -- Analyst
Raphael Crawford -- President, Catalysts
John Roberts -- UBS -- Analyst
Jeff Zekauskas -- JPMorgan -- Analyst
David Begleiter -- Deutsche Bank -- Analyst
Colin Rusch -- Oppenheimer & Co. -- Analyst
Ian Bennett -- Bank of America Merrill Lynch -- Analyst
Joel Jackson -- BMO Capital Markets -- Analyst
Kevin McCarthy -- Vertical Research Partners -- Analyst
Aleksey Yefremov -- Instinet -- Analyst
Sebastian Bray -- Berenberg -- Analyst
Arun Viswanathan -- RBC Capital Markets -- Analyst
Michael Sison -- KeyBanc Capital Markets -- Analyst
Vincent Andrews -- Morgan Stanley -- Analyst
Mike Harrison -- Seaport Global Securities -- Analyst
Jim Sheehan -- SunTrust Robinson Humphrey -- Analyst
Chris Kapsch -- Loop Capital Markets -- Analyst
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