The increase of permeability of new manganese-based cathode materials is expected to increase the amount of manganese used in lithium battery industry by more than 10 times between 2021 and 2035, but the dominant position of manganese used in iron and steel is difficult to change. The "dual pattern" of the manganese industry makes the structural shortage of manganese raw materials for batteries easy to occur. Positive enterprises that take the lead in the R & D and production of new manganese-based materials and manganese product manufacturers extending downstream battery materials will benefit. For the first time, it covers the manganese industry and gives it a "neutral" rating. It is recommended to pay attention to German Nano, Rongbai Science and Technology, Red Star Development and Xiangtan electrification.

Manganese is mainly used in the iron and steel industry. At present, the proportion of manganese used in batteries is relatively low.

Manganese is widely used in iron and steel, non-ferrous metallurgy, chemical industry, electronics, battery, agriculture, medicine and other fields. In 2021, the global consumption of manganese exceeds 20 million tons, of which more than 95% is used in the iron and steel industry. Manganese used in the iron and steel industry occupies an absolutely dominant position in the downstream consumption of manganese. Manganese applications in the battery industry include Zn-MNO _ 2 batteries and lithium-ion battery cathode materials, accounting for about 2% of total consumption in 2021, of which about 0.5% are used in lithium-ion batteries.

The development prospect of new manganese-based cathode materials is broad, and the industrialization process is accelerated.

At present, the main applications of manganese in lithium cathode materials are lithium manganate and nickel cobalt lithium manganate (ternary materials). The outstanding advantages of manganese-containing cathode materials are high energy density brought by high voltage, abundant supply of raw materials and low cost, while the disadvantages are mainly reflected in poor electrochemical performance, short cycle life and so on. In recent years, with the progress of material modification technology, the industrialization process of manganese-based cathode materials is accelerated. Among them, lithium ferromanganese phosphate, as one of the most important improvement directions of lithium iron phosphate, is expected to be the first to wait for industrial application. Lithium-rich manganese-based is considered to be the most promising cathode material for power battery after lithium iron phosphate and ternary materials because of its ultra-high energy density.

The amount of manganese used in lithium cathode materials will increase more than 10 times from 2021 to 2035.

Benefiting from the rapid growth of shipments of ternary cathode materials and lithium manganate materials, we expect that the amount of manganese used in lithium cathode materials will exceed 300000 tons in 2025, and the CAGR will be 32% in 2021-2025. With the increase in the permeability of new manganese-based cathode materials, we expect the amount of manganese used in lithium batteries to surge to more than 1.3 million tons by 2035, more than 10 times that of 2021. The amount of manganese used in the lithium battery sector is expected to account for 5% of the overall manganese demand in 2035, and the iron and steel industry will still account for more than 90% of the demand because of its large base.

China's manganese ore raw materials are highly dependent on imports, and the shortage of electrolytic manganese supply in 2021 led to a sharp rise in prices.

The total amount of manganese ore resources in China is high, but the grade is low. The processing of downstream manganese products mainly depends on imported raw materials, and the degree of external dependence is more than 90% in 2021. Manganese processing products include manganese alloy, electrolytic metal manganese, electrolytic manganese dioxide and manganese sulfate and so on. In 2021, due to the influence of factors such as industry "supply-side reform" and power restriction, the output of electrolytic manganese decreased by 200000 tons, there was a serious shortage of supply, and prices rose by more than 200%, significantly higher than other manganese products.

"check the spot quotation for SMM manganese products.

The manganese industry presents a "dual pattern", and the profitability of battery-grade manganese sulfate products rebounded in 2022.

The "high base number" of manganese used in the iron and steel industry and the "high growth rate" of manganese used in batteries make the manganese industry show a "dual pattern". Since 2022, the price trend of manganese products for iron and steel and batteries has reflected this trend. In addition, due to the commonly used electrolytic manganese acid solution production of battery-grade manganese sulfate, the supply disturbance of electrolytic manganese will lead to a structural shortage of battery-grade manganese sulfate. In 2022, the price of electrolytic manganese returned to rationality and the price of manganese sulfate continued to rise, which led to a significant rebound in the profitability of manganese sulfate products, and the profit per ton widened to 4000 yuan.

Risk factors: the risk of the change of battery technology route; the lower-than-expected growth of downstream demand; the risk of profit fluctuation caused by large fluctuations in manganese prices.

Investment strategy: the increase in permeability of new manganese-based cathode materials is expected to increase the amount of manganese used in the lithium battery industry by more than 10 times between 2021 and 2035. However, due to the high base of manganese consumption in the iron and steel industry, it will still occupy a dominant position in the long run.

The "dual pattern" of manganese for iron and steel and manganese for batteries makes it easy to have a structural shortage of manganese raw materials for batteries, and the profit of battery-grade manganese sulfate has been significantly broadened since 2022.

The investment decision suggestions revolve around two main lines: 1) the enterprises that take the lead in the R & D and production of new manganese-based cathode materials; 2) manganese product manufacturers whose business extends to downstream battery materials. For the first time to cover the manganese industry and give a "neutral" rating, it is recommended to pay attention to German Nano, Rongbai Science and Technology, Red Star Development and Xiangtan electrification.

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