SMM May 27th: on May 26th, Yuan Ye, a new energy analyst at SMM, delivered a keynote speech on "the demand for lithium iron phosphate is improving and the production capacity of iron phosphate may be a constraint" at the online live conference hosted by SMM. At the meeting, analyst Yuan Ye first combed the overall situation of the new energy industry and the overall demand for lithium iron phosphate, then introduced the production capacity distribution related to iron phosphate, the upstream raw material of lithium iron phosphate, and predicted the subsequent price of lithium iron phosphate.
I. supply and demand status and price review of lithium iron phosphate materials
The sales of new energy vehicles continuously set a new record, with a total of 732000 vehicles sold from January to April in 21 years.
New energy vehicle power battery has always been an important application field of lithium iron phosphate in China. Data show that the consumption of lithium iron phosphate in this field alone accounts for 50-60% of the total consumption of lithium iron. In the first quarter of 2020, due to the impact of the novel coronavirus epidemic in China, economic production and marketing activities almost stagnated, the demand of the new energy vehicle industry was not as expected, and sales fell 56.4% in the first quarter compared with the same period last year.
Up to July 2020, the new energy vehicle industry ushered in an inflection point. After the sales volume of that month returned to the same period last year, the production and sales of new energy vehicles continuously set a new record for the same period, and the upward trend remained unabated in 2021. From January to April, domestic production and sales of new energy vehicles soared 249.2% compared with the same period last year. Except for a decline in sales due to repeated epidemics during the Spring Festival holiday in February, domestic sales of new energy vehicles remained at 15W for the rest of the month, close to the level of the end of 2020.
The output of power battery: the output of power battery increased as well, and the proportion of lithium iron phosphate continued to rise.
In terms of power batteries, the demand for new energy vehicles has also maintained the growth of Synchronize. In the first quarter of 2020, under the influence of the epidemic, the demand of new energy vehicle industry was sluggish, the demand for upstream materials decreased, and the price of lithium iron phosphate went down all the way. Downstream demand began to pick up in the third quarter and released a huge amount in the fourth quarter, with the soaring price of raw material lithium carbonate driving up the price of lithium iron phosphate.
In April 2020, the total output of lithium iron phosphate in China's power battery output was 1.8GWH, but by April 2021, this part of the output had soared to 6.19GWH, an increase of 235.42% over the same period last year, while the proportion of lithium iron phosphate in power battery production also increased from 39.09% to 47.91%. The overall demand for upstream lithium iron phosphate materials in China has increased.
Due to the influence of upstream and downstream inventory and production time, there is an imbalance between supply and demand of ternary and iron-lithium materials in the power market, and the supply of iron-lithium market is tight, and the difference is relatively small.
There is a difference between the output and demand of ternary and lithium iron phosphate materials in the power market from January to April 2021, mainly due to the process from cathode materials to battery production for nearly one month, as well as safety inventory in both battery enterprises and cathode material enterprises. According to the data from January to April, the trend of supply and demand of cathode materials is basically the same, declining in February and rising gradually in March and April.
From the comparison between ternary and lithium iron, the difference between supply and demand of ternary materials and lithium iron phosphate is 40%, 50% and 5% of the monthly output, respectively. The difference is relatively large in February and March, mainly due to the high stock of the Spring Festival market and the adjustment of the production line of some battery enterprises. The difference of lithium iron phosphate is relatively low, mainly due to the high growth rate of market demand of lithium iron phosphate, the new production line is basically put into production in the second half of the year, resulting in tight supply and relatively low market inventory.
Review of the price of lithium iron phosphate
The tight supply situation in the lithium iron market is also truly reflected in the price of lithium iron phosphate. The following picture shows the price trend of lithium iron phosphate since January 2020. From its trend, it is not difficult to see that the price of lithium iron phosphate itself has remained stable most of the time, with only a few key price fluctuations in the past year. First of all, at the beginning of April 2020, the price of lithium iron phosphate experienced a round of decline, with the average price falling from 40800 yuan to 36000 yuan at the end of May. mainly because of the current epidemic situation of novel coronavirus, the overall production and sales of new energy vehicles at that time were light, and the demand for upstream raw materials such as lithium iron phosphate and lithium carbonate weakened, leading to a decline in prices. In September 2020, the new energy vehicle market warmed up, the demand for upstream materials increased, procurement resumed, at the same time, there was a cost reduction demand superimposed upstream material inventory accumulation at the battery end, and the price went down.
The last wave is the recent sharp upside, with the average price of lithium iron phosphate rising sharply from 35000 in mid-December to about 50, 000 in may 2021, a cumulative increase of 42 per cent. Mainly due to the rapid release of Q4 new energy vehicles in 2020, energy storage and small power, the demand is expected to rise the following year, downstream manufacturers are mostly hoarding, demand for batteries and upstream materials is soaring, lithium carbonate, iron phosphate and other key raw materials are in short supply, prices are on the rise, iron and lithium costs are rising, and the market demand for iron lithium is much higher than production, the overall supply and demand imbalance price upward.
Brief introduction and process path of iron phosphate
Process flow chart of solid state method of lithium iron phosphate
As we all know, at present, the mainstream lithium iron phosphate manufacturers in China are mainly divided into solid-phase process and liquid-phase process, among which the enterprises using solid-phase iron phosphate process can account for more than 90% of the total number of the industry. In the current manufacturing process of mainstream solid-state lithium iron phosphate materials, the proportion of lithium carbonate and iron phosphate reached 0.25 and 1.1, respectively. Because of the high consumption ratio, the price fluctuation of iron phosphate itself will be fully reflected in the cost of lithium iron phosphate material.
Also the importance of iron phosphate, some large lithium iron phosphate plants, such as Wanrun and Yuneng, have set foot in the upstream iron phosphate materials, forming a vertical layout, while Betteri and other manufacturers do not have their own iron phosphate production lines, but also strengthen the stability of the upstream supply chain through strategic cooperation and other methods, which also makes them to a certain extent from the recent shortage of iron phosphate relative to small and medium-sized manufacturers.
Brief introduction of iron phosphate
Ferric phosphate, also known as ferric phosphate, the molecular formula is FePO4, is a white, gray-white monoclinic crystal powder. It is a salt in which iron salt solution reacts with sodium phosphate, in which iron is positive trivalent.
From the perspective of use distribution, the current downstream products of iron phosphate are still mostly battery-grade products, accounting for 99% of the overall market share, and only a few are used in ceramic manufacturing, so the downstream battery demand has a greater impact on the iron phosphate industry.
At present, ferric phosphate process enterprises account for more than 95%, and the market share accounts for 78%.
The cost of iron phosphate material is dominated by phosphorus source, and the supply of raw materials is loose.
At present, the pricing of iron phosphate is mainly based on cost orientation, which links the price with the upstream raw materials and materials, and gives the corresponding quotation.
In terms of cost structure, the cost of phosphorus and iron sources in the material cost accounts for about 51% of the total cost, and the total material cost accounts for about 60% of the total cost of iron phosphate.
However, due to the large market of upstream products such as ferrous sulfate, monoammonium phosphate and high-purity iron blocks, the consumption of iron phosphate industry accounts for only a very small part of the total amount of the industry. therefore, the problem of raw material supply will not be a key factor restricting the production of ferric phosphate in most cases.
There is still a gap in the production capacity of iron phosphate, the cycle of expansion and re-production is long, and the effective production capacity is further reduced.
SMM believes that there are three reasons for the current shortage of iron phosphate:
1. There is a gap in the overall circulation capacity of iron phosphate. At present, there are many vertical manufacturers in the iron phosphate market, such as Yuneng Wanrun and so on. although these enterprises have iron phosphate production lines, most of them are for their own use, that is, they produce and sell themselves. after being made, the iron phosphate in the production line is directly used in its own lithium iron phosphate production and does not circulate to the outside world. This also makes the actual negotiable capacity of the iron phosphate market scattered among many small and medium-sized manufacturers, which is not easy to purchase.
two。 The circulation capacity of iron phosphate is far lower than the demand of the downstream industry. After excluding the manufacturers that produce and sell themselves on the market, the actual demand for iron phosphate in lithium iron phosphate industry is about 200000 tons, while the production capacity of negotiable iron phosphate in the market is only 163500 tons, there is a gap of 32500 tons between the two.
3. The problem of production expansion cycle and effective production capacity. First of all, there is the problem of production expansion cycle. on the whole, the production expansion cycle of iron phosphate is longer than that of lithium iron phosphate. generally, it takes 3-6 months for environmental protection approval and 6-8 months for construction and commissioning. After the trial production, downstream enterprises still need about 6-12 months to verify the iron phosphate material. Overall, the whole production expansion takes 1-1.5 years, which is much higher than 8-12 months of iron lithium. Therefore, in the case of rapid release of lithium iron phosphate in a short time, the expansion cycle of upstream iron phosphate is difficult to keep up with lithium iron phosphate.
On the other hand, before the downturn in the lithium iron phosphate industry and the weakening demand for iron phosphate in the industry, some manufacturers chose to shut down the production line, and at this time the production line also needed to be re-verified downstream of its production materials. as a result, some manufacturers have empty production lines but are unable to carry out production capacity, and the effective capacity in the industry has been further compressed, aggravating the supply shortage situation.
Price Forecast of Lithium Iron Phosphate
Overall, the current shortage of iron phosphate is more limited by the production capacity of its iron phosphate plant itself. In the past, lithium iron phosphate was suppressed by ternary materials in the field of new energy vehicles for a long time, and the demand for energy storage, two-wheeled vehicles, 5G base stations and so on did not expand on a large scale, so the industry demand was sluggish, the profit margin was extremely low, and some enterprises lost money for a long time, as did the upstream iron phosphate enterprises. During this period, part of the production capacity was shut down or eliminated by enterprises, and the production capacity was in the downhill stage. Therefore, in the middle of last year, due to the popularity of A00 class models, frequent accidents of ternary batteries and other reasons, the demand for lithium iron in the power market increased significantly, and the collective discharge of two-wheeled vehicles for energy storage. It is estimated that the production capacity of lithium iron phosphate will reach about 370000 tons in 21 years, which is much larger than the capacity of iron phosphate upstream, resulting in a shortage. At the same time, some iron phosphate plants, such as Wanrun Yuneng, have their own iron phosphate production lines, but they are more self-sufficient and not for sale, so the supply of iron phosphate in effective circulation in the market is relatively small, and the production capacity is more scattered.
"Click to see more historical prices of SMM Metals.
SMM expects that the current shortage of iron phosphate in the lithium iron industry will continue in the short term, but this situation may be alleviated in the fourth quarter with the expansion of production lines of some manufacturers and the entry of some titanium dioxide enterprises. And the price of lithium iron phosphate at present, the demand is far greater than the supply, SMM expects that its follow-up price may still be maintained at around 4.8-52000 yuan. While the downstream good demand superimposed upstream material price support, to June 2021, lithium iron phosphate prices may remain high and stable.
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