[SMM analysis] the future demand for iron and lithium is still there, and the development of solid-state batteries has become an important influencing factor.

SMM2 March 21: the recent hot situation in the lithium iron phosphate market continues. The three areas of new energy vehicles, small power, and energy storage market are expected to expand at the same time in 2021, driving upstream demand. Driven by strong demand from downstream battery manufacturers, iron-lithium factories mostly do not stop work during the Spring Festival, maintaining high production as a whole. The data show that the average monthly output from January to February in 2021 has reached more than 20,000, and the output in February 2021 has increased by 413.2% and 462.12% over the same period in 2020 and 2019, the highest in nearly two years, but supply still falls short of demand in the short term.

But in the final analysis, what is the future trend of the iron-lithium industry?

In terms of the three areas with the largest consumption of lithium iron phosphate at present, the end of new energy vehicles still accounts for the largest proportion of shipments, accounting for about 50% of overall shipments. And new energy vehicles are currently in a transition period from policy-oriented to consumption-oriented. At a time when power battery technology has initially met daily needs, new energy vehicle products are becoming more abundant, and market segments are gradually improving, sales are expected to show a substantial growth trend in 2021. SMM predicts that domestic sales of new energy vehicles will reach about 1.91 million in 2021, an increase of 40 per cent. The overall growth rate of the new energy vehicle market is expected, at the same time, according to the data, the continuous release of lithium iron in Hongguang MINI and other A00-class medium and low-end vehicles has led to the continuous upward installation of lithium iron phosphate batteries, which officially exceeded ternary batteries in December 2010. the proportion of superimposed applications is expected to increase in the overall high growth of the new energy vehicle market, and it is expected that the high demand for lithium iron phosphate will still be maintained. If we consider the current battery companies represented by Ningde era, such as Tesla, to enter the European and American markets, and the demand for two-wheeler applications and energy storage, the demand for upstream materials for iron-lithium batteries will be more considerable.

On the other hand, the prospect of the current iron-lithium industry is still limited. First of all, although iron lithium has great potential in the new energy vehicle market, which accounts for the largest share of application, the main reason for the increase in the proportion of lithium iron phosphate battery is that its safety is better than that of ternary battery. the process improvements made by major battery companies, such as the use of blade batteries, and CTP technology increases the overall energy density of iron lithium batteries, and at the same time, because of its relatively low price, it can occupy a place after the decline of the new energy subsidy policy. However, the disadvantage of low energy density of the material itself can not be covered up. At present, the major battery companies and automobile companies have begun to layout solid-state batteries, and solid-state batteries use non-flammable and safe solid-state electrolytes, so that the safety problem of high-nickel ternary, which is the most criticized, has been made up to a certain extent. Therefore, the living environment of lithium iron phosphate will be greatly impacted at that time. In addition, although the demand for the energy storage end of 5G base stations will be increased in the past 2-3 years, taking into account the overall construction cycle of domestic 5G infrastructure, the overall duration will not be too long, and after the peak of 5G base station construction, the demand in this field will gradually decline. Because of the new national standard, most of the electric two-wheeled vehicles are the replacement demand of lead-acid battery, but except that the incremental demand is not enough, and the replacement period is long, so the overall discharge process will be relatively smooth. Therefore, on the whole, the demand of iron and lithium industry may increase rapidly in recent years, but decline slowly after 4-5 years.