Market demand for high-nickel materials continues to rise, Rongbai science and technology to expand production "non-stop" solid-state battery cathode materials have been "ready"

As the domestic epidemic was gradually brought under control in the second half of last year, the sales of new energy vehicles began to pick up rapidly, and the manufacturers of ternary cathode materials located in the upper reaches of the industrial chain were also "taking advantage of the wind to set sail".

On April 15, Rongbai Technology (688005.SH), a domestic supplier of ternary cathode materials, released its annual report for 2020. During the reporting period, the company realized revenue of 3.788 billion yuan, down 9.59% from the same period last year, and realized net profit of 213 million yuan, an increase of 144.13% over the same period. The net profit after deducting non-return was 160 million yuan, an increase of 183.72% over the same period last year.

Rongbai Technology mainly focuses on high-nickel ternary materials and precursors, among which high-nickel ternary materials, due to their high specific capacity, high rate and high energy density, were accelerated by many international mainstream manufacturers during the reporting period. The company achieved sales of 26000 tons of ternary cathode materials for the whole year, an increase of about 15.5% over the same period last year, and the growth of core product NCM811 sales doubled compared with the same period last year.

In the first quarter of this year, domestic sales of new energy vehicles continued to grow, while power battery manufacturers around the world are expanding production on a large scale, and the market demand for high-nickel materials has further increased. Rongbai Technology said in its previously disclosed quarterly report that it is expected to achieve a net profit of between 90 million and 120 million in the first quarter.

In addition, in order to keep up with the pace of production expansion of battery manufacturers, Rongbai Technology has also been expanding production step by step in recent years. Zhang Yuan, the company's secretary, said in an on-the-spot investigation by a reporter from Science and Technology Innovation Board Daily that the company's existing annual production capacity of 40,000 tons of ternary cathode materials (mainly high nickel materials) will be expanded to 12 tons by the end of this year and to more than 300000 tons by 2025. "the company's pace of production expansion is driven by demand. The company must have demand to expand production first, and then to expand production. As part of the production capacity will still climb by the end of this year, the company's shipments of high-nickel materials are expected to be 50-60,000 tons this year. "

It is estimated that 5 to 6 tons of high nickel materials will be shipped this year.

During the reporting period, the substantial increase in Rongbai's technology performance compared with the same period last year was mainly due to the substantial increase in sales of the company's core products NCM811 series in the second half of 2020, while the company strengthened customer credit risk control and good customer payback.

The reporter learned that with the continuous decline of subsidies, the power battery market will be divided, forcing car companies and power battery enterprises' technology to develop towards high energy density, and the trend of high nickel is obvious.

In 2020, including Tesla, Peugeot, BMW and Volkswagen have been equipped with high energy density NCM811 power batteries in a number of models. According to GGII data, from 2019 to 2020, among the sales of ternary cathode materials in China, the development speed of high nickel power battery was the fastest, rising from 11% to 24%.

Zhang Yuan told Science and Technology Innovation Board Daily that the company's high nickel three-yuan production capacity has been in full production since November last year. "at present, the state of full production will continue, and it should be full production on a large scale this year."

At present, the domestic enterprises that can mass produce NCM811 high nickel products mainly include Rongbai Technology, Dangsheng Technology, Tianjin Palmer, Shanshan Energy, etc., while the other enterprises have a monthly output of no more than 100t. Among the enterprises listed above, according to Xinhuo Information and GGII data, Rongbai Technology is the only enterprise in China with an output of more than 25000 tons of ternary cathode materials in 2020.

In addition, Wang Shuai, a pioneering securities analyst, estimated in the research report that Rongbai Technology shipped about 18000 tons of 811 shipments in the whole year, accounting for 75%.

The company said in a conference call in March this year that the pattern of cathode materials will slowly concentrate this year. In the future, many battery factories will be based on 100Ghw, and these manufacturers will not develop cathode material plants with a monthly capacity of only 1000 tons. To match these battery factories, they will ship at least 3500 to 40 million tons a month.

The reporter learned from the research that the shipments of Rongbai Technology's high-nickel ternary materials were more than 8000 tons in the first quarter of this year and will reach more than 10,000 tons in the second quarter, that is, the shipments in the whole first half of the year will reach about 20,000 tons. Shipments in the second half of this year are likely to be more, with annual shipments ranging from 5 tons to 6 tons.

30% self-supply of precursor production capacity

It is worth noting that although Rongbai Technology's high-nickel ternary materials are currently in full production, they are still unable to meet the exuberant demand downstream.

From the capacity layout of global power battery manufacturers, LG Chemical plans to expand the capacity of the battery to 300G by 2023, ski is planned to expand to 100GWhby 2025, Ningde, the largest customer of Rongbai Technology, plans to expand its production capacity to more than 450GWh by 2025, while Panasonic, Samsung SDI, Yiwei Lithium, Funeng Technology, AVIC Lithium, Guoxuan Tech and other manufacturers are also getting ready.

According to Rongbai Technology's production expansion plan, in 2021, the company will go overseas and establish a positive production base in South Korea. By 2025, the company will expand the production capacity of high nickel cathode to more than 300000 tons.

"downstream battery manufacturers expand production very fast, and car factories expand production very fast, so the company's expansion speed is not radical, only that customers have given so much demand." Zhang Yuan believes that "the company will schedule production according to the (demand) data provided by customers, and (capacity) is still relatively accurate."

Rongbai Technology not only distributes the production capacity of high nickel materials, but also distributes the production capacity of precursors. The ternary precursor is a nickel-cobalt-manganese hydroxide intermediate of ternary cathode material, and its processing quality has an important influence on the performance and quality of ternary cathode material.

One of the IPO fundraising projects of Rongbai Science and Technology is the "2025 Power Lithium material Comprehensive Base (Phase I)" ternary precursor project with an annual output of 60,000 tons (hereinafter referred to as the "fundraising project"). The fundraising project was originally planned to reach a state of use by the end of 2020, but it is limited by the epidemic, subsidies for new energy vehicles and other factors. Rongbai Science and Technology has postponed the above-mentioned fund-raising projects: it plans to complete the construction of 30,000 tons in the first phase by the end of March 2022 and 30,000 tons in the first phase by the end of 2022.

According to Wang Shuai, an analyst at Capital Securities, the company has a precursor production capacity of 38000 tons, which is expected to reach 70, 000 tons by the end of 2021. In addition, the proportion of self-financing of Rongbai technology before 2020 is 20%. Zhang Yuan told reporters that the self-financing ratio could reach 30% in 2021.

During the reporting period, Rongbai Technology's precursor business achieved revenue of 12000 yuan, but it can also be seen from the pace of capacity layout that the company regards precursors as as important as ternary cathode materials.

"the company has a large expansion of cathode materials, and its own demand for precursors is very large. In addition, some customers, some cathode materials companies, and even some automobile manufacturers that may build their own battery factories, such as Volkswagen and Tesla, all have direct demand for precursors, and customer demand is very large, and they have put forward clear procurement requirements, so the company has to carry out the construction of (precursor) projects." Zhang Yuan told reporters.

Zhang Yuan further said that the expansion of the precursor can also ensure the structural deficiency of the company's production capacity, ensure the security of the supply chain, and increase the cost and gross profit margin of cathode materials.

The reporter learned that at present, the companies that produce precursors are mainly Grimme, Zhongwei shares, and Huayou Cobalt Industry, and the precursor production capacity of the above three companies is higher than that of Rongbai Technology at this stage. The difference is that the precursors of the above-mentioned enterprises are mainly used for export, while Rongbai Technology is mainly self-supply + export.

Ultra-high nickel supply solid state battery

In January, Xilai unveiled a 150kWh solid-state battery pack with a single energy density of 360Wh/kg, and announced that it would assemble the solid-state battery to its production car in the fourth quarter of 2022. There has been a heated discussion about whether the product is a real solid-state battery.

So how far are solid-state batteries from large-scale commercial use?

The Rong Bai Science and Technology Annual report shows that the technology of high energy density solid-state battery is advanced and is expected to be commercialized in 2022, and the resulting solid-state electrolyte and modified high-nickel ternary cathode materials usher in a period of development opportunities.

A reporter from Science and Technology Innovation Board Daily noted that in the Rongbai science and technology research project, for the "Ni90 high nickel new product development" project, the low cobalt route was mainly adopted, the cost was reduced by 8%, and the iteration of high nickel products was realized, and the ultra high nickel material was mainly suitable for traditional liquid and semi-solid lithium ion batteries. In addition, another research project of the company is "all-solid-state battery cathode material". The aforementioned project is in the pilot stage, and the objectives to be achieved include: to develop at least one high-nickel ternary cathode material suitable for solid-state batteries.

"for solid-state batteries, the current technical route (cathode materials) on the market is mainly to choose ultra-high nickel materials (Ni90 and above)," says Zhang Yuan. "some of the current manufacturers of solid-state batteries already use the company's materials."

Zhang Yuan further said that the modification of the company's high-nickel materials by solid-state batteries is relatively small, and has a greater impact on diaphragms and electrolytes, and the company mainly increases the content of nickel to ultra-high nickel materials.

Zhang Yuan said that at present, some downstream battery factories are also doing experimental research and development (solid-state batteries), and the commercial use of terminal car factories is also under way. As long as solid-state batteries are commercially available on a large scale, the company can provide large-scale ultra-high nickel materials.

Rongbai Technology also said in its business plan in the annual report that it would increase the supply of ultra-high nickel materials to the supply chain of domestic solid-state battery companies.

Zhu Yue, an analyst at Societe Generale Securities, pointed out in the research report that it is expected that after 2025 and 2030, the steady-state market share of solid-state batteries is expected to reach 20%, and the impact on the existing liquid battery system is limited; and solid-state batteries do not change the existing positive and negative electrode material system.