Industry observation | the price of lithium iron phosphate rebounded strongly and the profit space of enterprises is still not up to expectations.

Recently, the power battery market has quietly changed, and many new energy car companies have begun to favor lithium iron phosphate batteries again. The price of lithium iron phosphate has soared. Nevertheless, the profit space of lithium iron phosphate production enterprises is not very ideal. "the price of lithium iron phosphate may continue to rise slightly in the short term." Han Minhua, an analyst at zhuo Chuang Information Lithium, told the Financial Associated Press, "but the prices of upstream raw materials are also rising sharply, and the bargaining power of downstream battery manufacturers is still strong, and it is difficult to transmit production costs downstream. At present, the profit space of lithium iron phosphate production is not entirely satisfactory."

The increase in the price of raw materials is greater than that of products.

The rebound in demand is the main driver of the rebound in the price of lithium iron phosphate. In the field of power batteries, lithium iron phosphate battery is favored by the market again by virtue of its higher safety and economy and longer cycle life after making up for the deficiency of energy density. Tesla, Xiaopeng, Great Wall and other car companies have recently released lithium iron phosphate battery models.

The latest data show that in January 2021, the output of lithium iron phosphate batteries in China was 5.2GWh, accounting for 43.1 percent of the total output, an increase of 493.6 percent over the same period last year; the number of lithium iron phosphate batteries loaded was 3.3GWh, an increase of 349.8 percent over the same period last year.

In addition, with the large-scale construction of 5G base stations, lithium iron phosphate batteries are also expanding in the energy storage market. It is generally believed in the industry that the rebound in demand will support the price of lithium iron phosphate for a long time.

The increase in demand has led to a rise in the volume and price of lithium iron phosphate materials. according to information statistics, the price of lithium iron phosphate began to decline from the second quarter of last year until it began to rise at the end of the year and continues to this day. At present, the average price of dynamic lithium iron phosphate in the domestic market is about 45000 yuan / ton, which is nearly 30% higher than that at the beginning of the year.

But at the same time, the price of raw material lithium carbonate is also rising rapidly, which is much higher than that of lithium iron phosphate. The price of lithium carbonate has rebounded across the board since November last year. It is reported that at present, the price of battery-grade lithium carbonate is about 83000 yuan per ton, an increase of more than 60 per cent since the beginning of the year.

Downstream battery manufacturers still have strong bargaining power.

In addition to the extrusion of the upstream raw materials, the downstream battery manufacturers have further compressed the profit space of lithium iron phosphate production enterprises by virtue of their strong position.

"normally, lithium iron phosphate manufacturers will sign long-term contracts with downstream battery factories, and the increase in the price of raw materials may not necessarily be transmitted to the product end quickly. This is also the main reason why the demand for lithium iron phosphate began to pick up in the second half of last year, but the rebound in prices lagged to the beginning of this year." An executive of a lithium iron phosphate production enterprise in Shandong introduced to the reporter, "at present, the downstream of lithium iron phosphate is mainly a battery factory, and the limited application downstream also makes the lithium iron phosphate production enterprise have a weak say in the face of a battery factory. Bargaining power is generally on the low side. Coupled with the price pressure of upstream raw materials, the profit space of lithium iron phosphate production enterprises is worrying. "

A reporter from the Financial Associated Press combed the data and found that the gross margin of lithium iron phosphate products of major production enterprises was generally on the low side, which also confirmed the views of the aforementioned industry insiders.

Fengyuan Co., Ltd. (002805.SZ) has completed and put into operation the annual production capacity of lithium iron phosphate cathode material is 5000 tons, the company's 5000 tons / year capacity of the second phase of lithium iron phosphate project is carrying out related construction work. Semi-annual report data for 2020 show that Fengyuan Co., Ltd. has a comprehensive gross profit margin of 11.35% for lithium battery cathode materials.

German Nano (300769.SZ) is currently the largest lithium iron phosphate cathode material enterprise in China, with a domestic market share of about 27.2% in the first half of 2020. According to the person in charge of the company, the company has an annual production capacity of about 80,000 tons of lithium iron phosphate. Shipments of lithium iron phosphate products have continued to increase since the third quarter of last year and have been in full production since October, but the company's gross profit margin in the third quarter was only 9.2%.

Xiangtan Electric Chemical (002125.SZ) participating company Hunan Yuneng lithium iron phosphate annual production capacity of 50, 000 tons, the reporter called the company's securities department to learn that the company's lithium iron phosphate material is currently fully produced and sold, but has not obtained the relevant information about the gross profit level of the product.

Guanghua Technology (002741.SZ) has a production capacity of 14000 tons of lithium iron phosphate per year. According to the semi-annual report in 2020, the company's comprehensive gross profit margin of lithium battery materials is only 5.16%.

The Survival way of Lithium Iron Phosphate production Enterprises

In the face of the relatively clear growth prospects of lithium iron phosphate on the demand side and the squeeze of profit space, the major domestic lithium iron phosphate production enterprises have chosen to be deeply bound with the leading battery manufacturers to expand their market share by means of cooperative production expansion. get a more stable source of profit.

Hunan Yuneng, which is owned by Xiangtan Electric and Chemical Co., Ltd., has introduced leading battery enterprises such as 300750.SZ and 002594.SZ as strategic investment. The new production capacity of 40, 000 tons of lithium iron phosphate is expected to be put into production by the end of June this year, when the company's annual production capacity of lithium iron phosphate will reach 90, 000 tons.

German Nano announced in January that it would work with Ningde era to build a lithium iron phosphate project with an annual production capacity of 80,000 tons, with a construction period of 36 months. Data show that among the suppliers of lithium iron phosphate cathode in Ningde era, German Nano and Hunan Yuneng account for 60% and 10% respectively.

In addition, Fulin Seiko (300432.SZ) announced in January that the company plans to invest 600 million yuan to expand the production capacity of 50,000 tons of lithium iron phosphate cathode materials, and after the completion of the project will give priority to meet the procurement needs of the Ningde era, while working with the Ningde era to increase capital for Jiangxi sublimation new materials.

In addition to the development model deeply bound with battery giants, the utilization of by-products is also one of the development ideas of lithium iron phosphate enterprises. Among them, the waste acid, ferrous sulfate and other wastes produced in the production process of titanium dioxide are further processed into lithium iron phosphate is the most discussed topic in the industry at present.

"using the waste from titanium dioxide to produce lithium iron phosphate optimizes the production cost of titanium dioxide. After the waste is used, even if lithium iron phosphate cannot make money, enterprises can save the cost of waste disposal." The relevant person in charge of a titanium dioxide production enterprise introduced to the reporter.

Domestic titanium dioxide leader in the nuclear titanium dioxide (002145.SZ) announced last month that the company will invest 12.1 billion yuan to build an annual production capacity of 500000 tons of lithium iron phosphate project. On the 9th, the company said on the investor interactive platform that the project is currently dealing with the land use rights of the project and introducing the technical team of lithium iron phosphate for project design.