[SMM analysis] Lithium iron phosphate is still rising, raw materials, downstream demand support prices up

SMM3 March 26 News, the recent lithium iron phosphate market supply exceeds demand situation continues, and prices also continue to rise. As of March 23, the power type of lithium iron phosphate has risen to 45-50, 000 yuan / ton, while the energy storage type has also risen to the price range of 3. 90-44000 yuan / ton. As can be seen from the chart below, the price of lithium iron phosphate has rebounded significantly since it fell to a low of 34000 yuan in mid-November last year, and today the price has risen by 40 per cent.

Source: SMM

And why did lithium iron phosphate experience such a crazy increase?

First of all, from the downstream demand side, since the second half of last year, the downstream demand for lithium iron phosphate has rebounded significantly compared with before. the proportion of new energy vehicle production, sales and superimposed iron lithium battery installation has increased rapidly, while two-wheeled vehicles, energy storage demand continues to rise, driving upstream iron lithium demand.

In terms of cost, there are two main raw materials in the upstream of lithium iron phosphate, namely lithium carbonate and iron phosphate. Among them, lithium carbonate is used as the main lithium source material in lithium iron phosphate, and the dosage is about 0.25u1, that is, 0.25 tons of lithium carbonate is needed to produce 1 ton of lithium iron phosphate. However, recently, due to the freezing of salt lakes in winter at the upstream supply end of lithium carbonate, the Qinghai lithium salt plant was unable to produce smoothly, power was limited in some areas of Jiangxi, and the factory production was affected by the local government giving priority to the supply of electricity to residents' daily life. at the same time, under the influence of factors such as the need to overhaul rotary kilns in Sichuan lithium salt plants, output declined obviously, while downstream demand remained high, some iron lithium plants were out of stock. Some lithium iron plants are forced to purchase high-priced sources of goods, or directly use battery-grade lithium carbonate for production. Today, the mainstream price of industrial carbon has risen to 8.20-85000 yuan / ton, with an average price of 83500 yuan / ton. Compared with the price of 40300 yuan per tonne at the end of last year and the beginning of December, the price has risen to 107 per cent. If calculated according to its consumption, the recent increase in lithium carbonate alone makes the price of lithium iron phosphate up by 10800 yuan / ton.

The same is true of iron phosphate. In terms of materials, the specific gravity of lithium iron phosphate and iron phosphate has reached 0.96 per cent, and the amount used by some manufacturers has reached 1:1, which also means that the price fluctuation of iron phosphate material itself will be truly reflected in the price of lithium iron phosphate. It is reported that iron phosphate materials have also been out of stock to varying degrees recently, and the price has also risen from 12000 yuan / ton in February to about 14000 yuan / ton. This also directly leads to the upward cost of lithium iron phosphate materials.

Overall, while the downstream demand for lithium iron phosphate remains high and is expected to remain in the coming months, the supply of raw materials upstream is tight and the relative improvement in the bargaining power of lithium iron plants has pushed up its prices to some extent. However, considering the increase in upstream lithium carbonate production, especially industrial carbon production, the supply tension has eased to a certain extent. We expect the average price of lithium iron phosphate to rise to about 50-52000 yuan by the end of April.