The cost advantage of lithium iron phosphate is "greatly shrunk"?

"at present, the comprehensive cost of lithium iron phosphate battery has risen by about 50% compared with last year, while the increase in the cost of ternary battery in the same period is relatively small, and the cost advantage of lithium iron phosphate battery over ternary battery is shrinking," an industry insider analyzed recently. as the price of raw materials has continued to rise since the second half of last year, lithium iron phosphate has a cost advantage of less than 20% compared with ternary, and the cost economy has been much lower than before.

A domestic battery company said, "everything remains the same, and the rise in the price of raw materials increases the cost of lithium iron phosphate cells by more than 10 cents per watt hour, narrowing the gap with the cost of ternary batteries."

It is understood that in March this year, the price trend of raw materials for lithium batteries in China has begun to differentiate. the prices of cobalt, nickel and other metals used in ternary battery materials have gone up and down one after another, leading to a decline in the prices of ternary precursors and ternary cathode materials downstream; while materials such as lithium carbonate and electrolytes have maintained an upward trend since March due to tight supply, and the prices of lithium iron phosphate materials continue to rise and will continue for some time.

In this case, the comprehensive cost gap between lithium iron phosphate cell and ternary cell is still narrowing, and the economy of lithium iron phosphate will be reduced again. I wonder if battery companies will re-increase the proportion of ternary battery capacity with higher energy density when the cost gap between the two is narrowed to the point that the economic advantage of lithium iron phosphate is no longer obvious.

01 Lithium Carbonate and electrolyte prices "fly together"

The weight that lithium iron phosphate cannot bear

Among the main costs of power batteries, positive materials, negative materials, electrolytes and diaphragms account for a relatively large proportion, so the fluctuation of material prices has the most obvious impact on the cost of the battery.

Market data show that as of April 26, the mainstream quotation for power lithium iron phosphate materials was 48000-52000 yuan per ton, up about 30 per cent from the beginning of January and 44 per cent from the low of 36000 yuan per ton in November 2020.

The direct driving force behind the rise in the price of lithium iron phosphate is the sharp rise in the price of battery-grade lithium carbonate. Lithium carbonate is an indispensable raw material for cathode materials and electrolytes for lithium batteries. The price of lithium carbonate has soared since last year, which has directly greatly increased the cost of cathode materials and electrolytes for lithium batteries.

Data show that the current mainstream price of battery-grade lithium carbonate is between 88000 yuan and 95000 yuan per ton, up 71.2 percent from the beginning of the year and nearly double the low of 48000 yuan per ton last year.

Also driving up the cost of lithium iron phosphate is the soaring price of electrolytes.

The soaring price of electrolyte has many factors: first, the rising price of lithium carbonate, the upstream material of electrolyte, promotes the "significant rise" in the price of lithium hexafluorophosphate; second, due to the recovery of lithium iron phosphate battery market, the demand for lithium hexafluorophosphate increases greatly, the production capacity of lithium hexafluorophosphate is limited, there is a supply gap, and the price soars. Third, lithium iron phosphate needed in the electrolyte VC (additive vinylidene carbonate), due to insufficient production capacity, the price also skyrocketed.

Market data show that due to tight supply, the price of lithium hexafluorophosphate has risen from the lowest 64000 yuan / ton in 2020 to about 220000 yuan / ton in mid-April 2021, and the price has more than tripled. On April 18, Polyfluorodo announced that since April 18, the company's sales price of lithium hexafluorophosphate has been raised by another 30, 000 yuan / ton to all kinds of domestic customers, and the domestic mainstream price of lithium hexafluorophosphate has exceeded 250000 yuan / ton.

It is worth noting that what is more tense than lithium hexafluorophosphate is the increase in the price of VC due to insufficient production capacity. Data show that at present, the mainstream price of VC in the market has exceeded 200000 yuan / ton, and some enterprises even take the price as high as 240000 yuan / ton, which is a substantial increase compared with the average market price of 150000 yuan / ton in 2020.

In fact, lithium carbonate and electrolyte are also important raw materials for ternary batteries, and the price rise has also promoted the price of ternary materials, but the ratio of the two to increase costs is not consistent because of the difference in consumption and manufacturing costs.

It is reported that 1GWh lithium iron phosphate batteries use about 10 per cent more electrolyte than 1GWhternary batteries.

In addition, the dosage of lithium iron phosphate is different from that of VC, which is an important additive used in ternary battery electrolyte. An electrolyte company source revealed that VC is an important additive in lithium iron phosphate battery electrolyte (the mass ratio is 2-4%), and its consumption far exceeds that of ternary battery electrolyte (mass ratio is a few thousandths).

In terms of cathode materials, lithium hydroxide, as another raw material upstream of cathode materials for ternary batteries, is not as crazy as lithium carbonate.

It is worth noting that although the increase of ternary cathode materials is not as high as that of lithium iron phosphate, the price increase of ternary precursors and cathode materials has reached a high level in a certain period of time and began to decline. The data show that recently, the quotations of domestic ternary materials and precursors have begun to decline, but lithium iron phosphate is still on the rise due to the production capacity limitations of lithium carbonate and electrolyte. People familiar with the matter said that the supply and demand pattern of lithium carbonate and electrolyte is difficult to reverse in the short term, and prices are expected to continue to be strong, while lithium iron phosphate prices continue to strengthen with lithium carbonate.

There is no "shortcut" for the sharp increase and decrease of pressure in 02 battery factory for the time being.

At present, the rise in the price of battery raw materials is being transmitted layer by layer. It is understood that lithium hexafluorophosphate and VC were affected by production capacity in the fourth quarter of last year, when they began to soar, when they were subject to the impact of sluggish price transmission, electrolyte enterprises generally faced more obvious cost pressure. However, the jump in electrolyte prices after the Spring Festival has fully transmitted the cost pressure brought about by the rise in raw materials in the early stage.

The same is true of raw materials such as lithium carbonate. In the end, the transmission to the battery end is the increase in battery cost.

It is worth noting that the whole car factory will not easily increase prices, so the final layers of price increases from the upstream are concentrated in the battery factory.

According to a domestic battery manufacturer, the rise in raw material prices has had an impact on its profits, and the cost pressure is relatively obvious. "the whole car factory will not easily agree to a price increase for battery enterprises unless it is a new project, so it is very difficult for battery enterprises to raise prices." It is reported that for most battery companies, ensuring supply to the car factory is still the top priority, and they are also actively coordinating with the whole car factory, "such as adjusting the mode of payment to ease the pressure."

It is understood that some end markets are battery manufacturers in the field of power tools, electric low-speed cars and consumer digital. Under the cost pressure of rising raw material prices upstream, they have begun to raise battery prices and transform cost pressure.

Although the price of the upstream material of lithium iron phosphate has been rising all the time, it still has a cost advantage of about 10% and 20% compared with ternary batteries. In addition, the rapid introduction of lithium iron phosphate batteries into electric passenger vehicles, electric light vehicles, energy storage, communication base stations and other markets has led to a rising demand for lithium iron phosphate.

03 material capacity shortage

Some battery companies are worried that the supply cannot be guaranteed.

In fact, behind the increase in the price of lithium iron phosphate materials, it is the market demand for lithium iron phosphate materials such as electric vehicles, light vehicles, energy storage and communication base stations that has blowout, the market has been enlarged, and there is a large gap in material production capacity.

It is worth noting that the current insufficient capacity of lithium iron phosphate has caused some battery companies to "panic".

The data show that the output of lithium iron phosphate in China is about 142000 tons in 2020, while that of ternary materials is 210000 tons in the same period. There are many manufacturers of ternary materials, and the high-quality production capacity is also relatively sufficient. In contrast, lithium iron phosphate production capacity, the overall production capacity is relatively small, and mainly concentrated in the hands of several enterprises in the head.

With the increasing demand for lithium iron phosphate materials downstream, some power battery head enterprises have begun to bind lithium iron phosphate head enterprises to high-quality production capacity, or even directly "contract production line production capacity". Some lithium iron phosphate material head enterprises have even stopped quoting to non-head customers because of their limited production capacity.

A domestic energy storage battery company said that the rising price of lithium iron phosphate material and insufficient production capacity put great pressure on it. "the current demand for energy storage is not as large as the scale of new energy vehicles. Lithium iron phosphate material head enterprises mainly give orders to power battery head enterprises, resulting in our supply and bargaining will be affected."

Fortunately, in the face of the rapid rise of the market, lithium iron phosphate materials and electrolyte enterprises are also actively expanding production capacity. The shortage of this kind of material is expected to be alleviated gradually in the next few years. Data show that the output of lithium iron phosphate in China reached 67000 tons in the first quarter of 2021, nearly half of the output of last year, with a rapid growth rate. Among them, German Nano, Hunan Yuneng and other leading enterprises have all produced more than 10, 000 tons in the first quarter, and industry institutions predict that the national output of lithium iron phosphate is expected to exceed 300000 tons in 2021.

However, it is worth noting that some people in the industry pointed out that due to the hot market of lithium iron phosphate, many players with "non-professional background" are also pouring in. The uneven quality of lithium iron phosphate materials may be a major feature of the next year or two.