[SMM Analysis] the demand for iron-lithium batteries will exceed 90GWh in 2022, but the imbalance between supply and demand is under pressure.

SMM November 27th: since September, with the sharp increase in production and sales of new energy vehicles, the demand of the whole new energy industry chain has increased, among which the demand for lithium iron phosphate has increased most obviously. The large lithium iron phosphate factory is basically close to full production in October, the demand of the head battery enterprises continues to grow in November, and the corresponding suppliers iron lithium enterprises have been in short supply. According to feedback from many iron and lithium enterprises, a large number of power orders are expected to be maintained until the beginning of next year. In November and December, the iron and lithium plant is basically operating at full capacity. In January next year, demand is still high and stocks are available before the year, and it is expected to remain at full production.

New energy best-selling models are equipped with iron lithium batteries to increase the share of iron lithium in the passenger car market.

The proportion of iron-lithium batteries in the passenger car market increased linearly in the second half of this year, rising from 1.3% in February to 17.5% in September. The increase in iron-lithium batteries in the second half of the year was mainly due to the number of matching models. After the launch of BYD "Han" and Hongguang MINI, the production and sales of BYD "Han" and Hongguang MINI increased month by month, especially Hongguang MINI ranked first two months after its launch. BYD's "Han" is slow to supply because of insufficient production capacity, but from its booking quantity, its best-selling degree is no less than Tesla Model 3 at the beginning of the year. At present, BYD's production capacity is also gradually increasing, and its monthly sales are expected to gradually catch up with Model 3 in the future.

In addition, in early October, Tesla announced that his standard extended version of Model 3 had changed from ternary batteries to iron-lithium batteries, and the price of bicycles also dropped to less than 250000 yuan. The falling price and brand effect once again boosted the sales of Tesla's Model 3, which increased to more than 20, 000 in October. Driven by a number of best-selling models, the installed capacity of iron-lithium batteries reached 2.4 GWH in October, up 127.5% from a year earlier, and the proportion of installed capacity also rose to 41% from 13% in February.

According to the data of the installed capacity of pure electric passenger cars in the past ten cars, only Chery and Jianghuai automobile iron lithium batteries accounted for a relatively high proportion in 2019, while the proportion of iron lithium in other car enterprises was close to 0. Judging from the data from January to September this year, BYD, SAIC GM Wuling and Changan automobile iron lithium battery sets have all increased greatly, coupled with the iron lithium version of Tesla Model 3 and BYD "Han", it is expected that the proportion of iron lithium will continue to increase throughout the year.

In the second half of this year, a lot of iron-lithium matching models were added to the market. In addition to Hongguang MINI for A00 class models, most of the other models are Amure C-class cars. It can also be seen that iron-lithium batteries are widely used in passenger cars. In addition, the prices of the models in the picture below are lower than those of similar models, plus the mileage is more than 400 kilometers, the safety is higher, the overall performance price is better, to meet the normal needs of consumers for electric vehicles, but also increase the demand for iron lithium batteries in the car market.

In addition to the increase in the power market, the construction of 5G base stations in the energy storage market has also increased the demand for iron-lithium batteries this year, and the demand for iron-lithium batteries in the energy storage market is expected to exceed that of 15GWh this year. In addition, there has been a high increase in orders in the electric two-wheeler market this year. Affected by the epidemic in the first half of the year, it is inconvenient for people to travel. Many customers choose to buy electric two-wheelers to commute to and from work. Coupled with the increase in lithium battery permeability, the demand for lithium batteries for electric bicycles has been boos Overlay the national volume of shared motorcycles this year, and use more lithium batteries. Although the proportion of iron-lithium batteries in electric two-wheelers is relatively low this year, due to the price advantage of iron-lithium batteries, coupled with their good cycle life and safety, the demand for iron-lithium batteries in the two-wheeler market is also gradually increasing. In the long run, the demand for iron-lithium batteries in the power market is the highest, and the growth rate of the energy storage market is relatively obvious. It is expected that the demand for iron-lithium batteries in the terminal market will reach more than 90GWh in 2022.

The price of the imbalance between supply and demand in the iron-lithium material market has been low for a long time.

In the first half of the year, due to the impact of the epidemic, downstream demand dropped sharply, the price of lithium carbonate plummeted, and the price of lithium iron dropped accordingly. Coupled with the cost reduction requirements of battery enterprises, the price of iron lithium is suppressed, the supply of iron lithium market exceeds demand, there is an imbalance between supply and demand, and the price of iron lithium is near the cost line for a long time.

After the 11th festival, the price of lithium carbonate has gradually increased, and the recent increase has reached 4000-5000 yuan / ton. coupled with seasonal reasons, the price of iron phosphate has also risen, and the cost of lithium iron materials has basically increased by 3000 yuan / ton. Due to the increase in downstream power demand, iron and lithium factories are in short supply, and the recent price increase of 1000-3000 yuan / ton has been gradually transmitted to small and medium-sized battery enterprises. Other iron-lithium enterprises also basically began to raise prices, about 1000-1500 yuan / ton, iron-lithium plants still need to bear part of the cost pressure, the downstream acceptance is still low, iron-lithium prices still take time to rise.

With the overall market demand improving, the price of lithium salt also continues to rise, iron and lithium basically no profit space, is expected to rise slowly with the price of lithium salt. From the perspective of the balance of supply and demand, the accumulation of iron and lithium in the market has gradually improved since 2021, coupled with the fact that the price of iron and lithium has been low for a long time, many small factories have also gradually withdrawn from the market, market concentration has increased, and the price of iron and lithium is expected to rise gradually. However, due to the oversupply in the overall market and the high downstream demand in the future, many new enterprises enter the market, and the profit space of iron and lithium enterprises is expected to remain at a low level.

SMM battery materials research team

Mei Wangqin 021-51666759

Huo Yuan 021-51666898

Liu Xiaoyi 021-51666716

Yuan Ye 021-51595792