LiPF6 Prices Surge Over 17% in 4 Months! Shenzhen New Star's $160 Million LiPF6 Project Transfer Terminated

SMM, December 30: Recently, Shenzhen New Star announced that its wholly-owned subsidiary, Songyan New Energy Materials (Quannan) Co., Ltd., initially planned to transfer the machinery, equipment, and labor related to the Phase I 3,000 mt and Phase II 2,000 mt production lines of its LiPF6 project to its wholly-owned subsidiary, Ganzhou Songyan New Energy Materials Co., Ltd., and sell 100% equity of the latter to Jiangxi Huikai Chemical Co., Ltd. for a transfer price of 160 million yuan. However, due to the economic slowdown and weak downstream demand for hydrogen fluoride, Huikai Chemical's business profitability continued to decline, leading to difficulties in securing acquisition financing and delays in receiving sales payments, making it unable to fulfill the payment obligations for the asset transfer.

As a result, the company decided to terminate this asset transfer and signed a "Termination Agreement." According to the agreement, both parties agreed that the "Asset Transfer Agreement" and its supplementary agreement would cease to be effective from the date of the termination agreement. Songyan New Energy would deduct 1 million yuan from the amount already paid by Huikai Chemical as compensation, and the remaining funds would be refunded to Huikai Chemical. The 100% equity of the project company would revert to Songyan New Energy. The termination of this asset transfer does not involve returning related assets and will not change the scope of the company's consolidated financial statements. In the future, the company plans to continue its orderly operations and replan and restructure the related assets according to its strategic development plan.

It is worth noting that the company initially announced this transfer on July 31, stating that in recent years, due to lower-than-expected market demand for LiPF6 and a significant drop in product prices, the LiPF6 business segment had been operating at a loss, with little prospect of substantial improvement in the short term. To enhance overall operational efficiency, further optimize asset structure, focus on core businesses, and improve financial conditions, the company's wholly-owned subsidiary intended to divest part of the LiPF6 project assets.

The losses in the LiPF6 segment dragging down the company's performance were also reflected in Shenzhen New Star's H1 performance report. According to the report, the company recorded a net loss attributable to shareholders of publicly listed firms of 65 million to 55 million yuan in H1 2024, an increase of 5.9668 million to 15.9668 million yuan compared to the same period last year. The company explained that the continued losses in H1 2024 were mainly due to the sustained decline in LiPF6 product prices and lower-than-expected downstream customer demand, resulting in product performance losses. According to historical SMM quotes, the average spot price of LiPF6 in H1 2023 was 152,200 yuan/mt, which dropped to 67,900 yuan/mt in H1 2024, a decrease of 84,300 yuan/mt, or 55.39%.

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However, according to SMM spot quotes, since November, LiPF6 spot prices have gradually shown an upward trend. As of December 30, domestic LiPF6 spot prices stabilized at 62,000–64,000 yuan/mt, with an average price of 63,000 yuan/mt, up 9,250 yuan/mt from the August 15 low of 53,750 yuan/mt, representing a 17.21% increase.

Regarding the rise in LiPF6 prices in November, one reason was the increase in raw material lithium carbonate prices. Additionally, the continuous rise in lithium fluoride prices, combined with LiPF6 companies standing firm on quotes, were major factors driving the price increase. Furthermore, downstream demand was robust in November. With the growing demand for LiPF6 from downstream electrolyte manufacturers, the operating rate in the industry also increased, and the market supply-demand balance improved. Some LiPF6 companies reached full-capacity production to meet downstream demand. Against this backdrop of supply-demand balance, coupled with the rebound in upstream raw material prices, LiPF6 prices rose significantly.

Entering December, although the price of lithium carbonate, one of the raw materials for LiPF6, began to pull back, lithium fluoride prices remained high, continuing to support LiPF6 costs. Additionally, downstream demand remained robust, increasing the demand for LiPF6. The industry's operating rate stayed near recent highs, with SMM estimating the operating rate of LiPF6 companies in December at approximately 71.77%. Moreover, downstream companies recently initiated long-term contract negotiations. However, as current LiPF6 spot prices are at multi-month highs, downstream players mostly adopted a wait-and-see approach. In the short term, SMM expects LiPF6 prices to remain in a stalemate.

With LiPF6 prices gradually rebounding, it remains uncertain whether Shenzhen New Star will continue to dispose of its LiPF6 project following the termination of this asset transfer. The company stated in its announcement that it plans to continue its orderly operations and replan and restructure the related assets according to its strategic development plan.

On November 25, Shenzhen New Star responded to related investor inquiries on an interactive platform, revealing that its LiPF6 products are of stable quality and can consistently supply high-quality LiPF6 products to downstream electrolyte manufacturers. The current capacity is 13,300 mt/year.