The price of electrolyte products has been significantly adjusted compared to 2023, and Tinci Materials' net profit in 2024 is expected to decline by over 70%.

SMM, January 8: On the evening of January 7, Tinci Materials, a leading domestic electrolyte producer, released its 2024 performance forecast. According to the announcement, the company's net profit attributable to shareholders of the publicly listed firm in 2024 is expected to be 440 million to 520 million yuan, a YoY decrease of 72.50% to 76.73%.

Regarding the reasons for the performance change, Tinci Materials stated that in recent years, due to the slowdown in downstream demand growth, the supply-demand relationship in the NEV industry chain has shifted. During the reporting period, the lithium battery materials industry chain continued to operate at the bottom of the industry cycle. Although the company actively adjusted its product structure, customer structure, and sales strategies, increased sales of new products such as structural adhesives, worked to reduce losses in cathode material businesses, and adopted a prudent hedging strategy to stabilize raw material prices, the price of electrolyte products underwent significant adjustments compared to 2023, leading to reduced unit profitability. Additionally, inventory write-downs, asset impairments, and credit impairments for certain products further contributed to the YoY decline in profits.

Taking electrolyte (for LFP battery) as an example, according to historical SMM quotations, its spot prices showed a fluctuating downward trend over the past year. As of December 31, 2024, the spot price of electrolyte (for LFP battery) was 21,175 yuan/mt, down 825 yuan/mt from 22,000 yuan/mt at the end of 2023, a decrease of 3.75%. Although the annual decline was not significant, the average spot price in 2024 was 21,166 yuan/mt, down 11,499 yuan/mt from 32,665 yuan/mt in 2023, a decrease of 35.2%.

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In Q4 2024, electrolyte prices gradually recovered due to improved downstream demand and rising LiPF6 prices. The current average spot price of 21,175 yuan/mt represents an increase of 1,225 yuan/mt, or 6.14%, from the September low of 19,950 yuan/mt.

As of now, according to SMM, on the supply side of electrolytes, LiPF6 prices remain stable, and the market is in the stage of negotiating orders, with electrolyte producers primarily purchasing LiPF6 as needed. On the demand side, battery cell manufacturers' demand for electrolytes remains relatively stable. On the cost side, prices of LiPF6, solvents, and additives are temporarily stable. Currently, electrolyte prices are mainly influenced by LiPF6 prices. However, due to price suppression by battery cell manufacturers, electrolyte prices remain stable. In the short term, fluctuations on the cost side may cause electrolyte prices to fluctuate within a certain range.

On the same day, Tinci Materials also released two additional announcements. One stated that the company and its subsidiary, Tinci Delaware, signed two Equity Purchase Agreements with Honeywell and its subsidiary, AEM, to jointly establish a joint venture through equity purchase and subscription. The joint venture will focus on the production, operation, and sales of products such as liquid LiPF6 and electrolytes. According to the agreement, Tinci Delaware will transfer 49% of its wholly-owned subsidiary, Tinci Texas, to Honeywell for an estimated consideration of $16.66 million. After the equity transfer, Tinci Delaware will hold 51% of Tinci Texas, while Honeywell will hold 49%. Tinci Texas plans to build an electrolyte project with an annual capacity of 200,000 mt. Additionally, Tinci Delaware will subscribe to newly issued shares of AEM, with the transaction consideration to be separately negotiated based on AEM's initial investment. After the subscription, Honeywell will hold 51% of AEM, while Tinci Delaware will hold 49%. AEM plans to construct a liquid LiPF6 project with an annual capacity of 100,000 mt, with a total investment estimated at $400 million.

Regarding the impact on the company, Tinci stated that this external investment aims to jointly establish a joint venture with Honeywell, leveraging both parties' resources to achieve complementary advantages and resource sharing. On one hand, Honeywell has the capability for large-scale production and supply of hydrofluoric acid products, enabling localized supply of raw materials for liquid LiPF6 and effective recycling of by-product acids from liquid LiPF6, which supports the construction of an integrated supply chain system for lithium battery projects, thereby reducing production costs and enhancing product competitiveness. On the other hand, partnering with a local company facilitates localized operations in North America, accelerates the large-scale production of the company's electrolyte products in North America, and enables "proximity supply" to key customers. This provides the company with a first-mover advantage in expanding overseas markets, continuously strengthening and enhancing its market influence, comprehensive competitiveness, and internationalization. This cooperation is a significant step for the company in entering the North American market and improving its global industry layout, aligning with the company's strategic development plan and the interests of all shareholders.

Additionally, the company's wholly-owned subsidiary, Tinci Texas, signed a Processing Agreement with Duksan Electera. Under the agreement, Duksan Electera will process and produce lithium-ion battery electrolyte products for Tinci Texas at an agreed processing price during the contract period. From 2025 to 2027, the total processing volume is expected to be no less than 10,000 mt.

The signing of this agreement facilitates the rapid large-scale production of the company's lithium-ion battery electrolyte products in North America, achieving "proximity supply" to key customers, optimizing transportation costs, and providing high-quality services to customers. It also gives the company a first-mover advantage in entering and further expanding the North American market, making it an important step in improving the company's global industry layout.