Vanadium and titanium in Panzhihua Iron and Steel Co., Ltd.: stable raw material price promotes product gross profit margin, which will promote the development of vanadium battery in the future.

Due to the substantial growth in performance, the 2021 performance presentation of Vanadium and Titanium (000629.SZ) of Panzhihua Iron and Steel Co., Ltd., held in the afternoon of April 12, has attracted the attention of more investors. At the meeting, the company's management told investors that the gross profit margin of the company's products increased last year due to the rise of products driven by the price of raw materials and the measures taken within the company to reduce costs and increase efficiency. In addition, Ma Zhaohui, general manager of the company, revealed: "the market expects that vanadium batteries will have greater growth in the field of energy storage, and the prospect is promising." The company has the development and production capacity of vanadium electrolyte, and will actively participate in promoting the development of vanadium battery. "

Vanadium and titanium are mainly engaged in the production and sales of all kinds of vanadium and titanium products in Panzhihua Iron and Steel Co., Ltd. Vanadium oxide and titanium dioxide occupy an important position in the market. The company's vanadium products (in terms of V2O5) have a production capacity of 40, 000 tons per year, and the company's 2021 vanadium production will account for about 20% of the global market and 32% of China's market share, executives said at the meeting. The company's titanium dioxide production accounts for about 6% in China.

At the performance meeting, according to the company, the raw materials of its main products have a certain market cost advantage, and the prices of raw materials are stable in a certain period of time. Xie Zhengmin, deputy general manager and financial person in charge of the company, said: "the Purchasing Framework Agreement (2022-2024) signed between the company and the controlling shareholder Panzhihua Iron and Steel Group has clearly stipulated that the Panzhihua Iron and Steel Group ensures that all the crude vanadium slag generated by its subsidiaries are sold to the company. Fully protect the company's stable raw material source of crude vanadium slag. "

The Pacific Securities Research report shows that the price for the purchase of crude vanadium slag from Panzhihua Iron and Steel Group is 3019 yuan / ton, which is obviously superior to the market price. Titanium concentrate is also provided by Panzhihua Iron and Steel Group. Although the price advantage of raw materials is not as good as that of vanadium products, it also ensures the stability of raw materials. "the gross profit margin of titanium products in 2021 is 17.74%, which is 9.26 percentage points higher than that in 2020," Xie Zhengmin said. "

According to the financial report, the company deducted non-net profit of 1.001 billion yuan in 2021, a sharp increase of 367.67% over 2020. In the first quarter of this year, the company is expected to make a profit of 450 million to 500 million yuan, an increase of more than 100% over the same period last year. Xie Zhengmin said: "since the beginning of this year, vanadium product prices have risen, titanium dioxide prices are relatively stable, overall slightly increased." The company is close to the market, and the production line capacity is fully released. "

At the meeting, some investors asked about the company's expectations of market demand, the company's independent director Mitsuo said that the domestic downstream is in a period of recovery or stability, the international construction repainting market will usher in a business cycle, titanium dioxide market will be strongly supported. At the same time, "carbon neutralization" in vanadium industry opens the space of new energy market, which is helpful to promote the development process of all-vanadium flow battery energy storage project. The continuous upgrading of the application of high-strength steel in high-end equipment and high-end manufacturing industry will be more conducive to the growth of the demand for vanadium products in the long run.

For future planning, Ma Zhaohui also revealed: "according to the market demand, the company will build vanadium electrolyte production line and supporting facilities in phases during the 14th five-year Plan period."

The company believes that in the field of chemical energy storage, after more than 30 years of development, the technology of all-vanadium flow battery has been mature, and a number of demonstration project cases have been built, and the market generally believes that it has the prospect of industrial application. In response to whether the investor company will lay out the whole vanadium battery industry chain, Mitsuo said: "the company has the production technology and capacity of vanadium electrolyte, vanadium electrolyte is an important part of vanadium battery."