Up! Under the continuous rise of lithium power raw materials, these mid-stream enterprises take turns to "scramble" for upstream resources.

SMM July 19th: in the increasingly hot field of new energy vehicles, the power battery industry, as the core of new energy vehicles, is also frequently reported to be facing the news of "battery shortage". In this state of imbalance between supply and demand, the price of upstream raw materials continues to rise. It is reported that at present, the demand for lithium iron phosphate cathode material is growing rapidly, the contradiction between supply and demand of lithium hexafluorophosphate material for the production of electrolyte is prominent, and the price is greatly increased.

According to the historical price of SMM, the average spot price of power lithium iron phosphate alone has risen to 52000 yuan / ton as of July 19, an increase of 36.8% this year.

"Click to view the historical price of SMM Metals.

And before that, with the rise in the price of cobalt, the prices of precursors and ternary materials also rose. As an example, the spot price of ternary precursors (523 / power) averaged 121000 yuan / ton as of July 19, up 16.3% from the low price in May, according to the spot quotation of SMM.

"Click to see more spot prices of SMM metals.

It is obvious that in this context, the upstream raw material side has benefited the most, which can also be seen in the announcement of the first-half performance increase of the upstream lithium power enterprises. however, the middle-stream enterprises are faced with the awkward situation of passively rising costs and difficult to transfer to the downstream, and many enterprises have to start upward mergers and acquisitions because of restrictions on the pace of expansion. The following are several mid-stream enterprises that have started mergers and acquisitions to the upper reaches of the SMM.

Ningde era:

Ningde era began to make various layouts in mineral resources such as lithium and nickel as well as negative electrodes, electrolytes and equipment a long time ago. In addition to taking a stake in Australian lithium mine Pilbara, Ningde Times is also the controlling shareholder of North American lithium, holds a 25 per cent stake in Tianqi Lithium, and is involved in investment in Neo Lithium lithium mines and lithium carbonate projects in Canada.

In terms of negative materials, Pingnan Times, which is 100% controlled by Ningde Times, previously announced that it plans to build a silicon negative electrode project with an annual production capacity of 430 tons; in terms of electrolytes, Ningde Times has a 66% stake in time Sikang, which plans to open a new lithium salt project of 300 tons per year.

The Ningde era also acted frequently on raw materials such as lithium carbonate and lithium hydroxide. In March 2021, Tianyi transferred a 10 per cent stake in Tianyi Lithium to Ningde Times for 58.35 million yuan. after the deal was completed, Ningde Times held a 25 per cent stake in Tianyi Lithium, whose main products are lithium carbonate and lithium hydroxide.

In April, when Tianhua Super net raised a total of 780 million yuan for the construction of the second phase of battery-grade lithium hydroxide project, Ningde Times participated in raising 120 million yuan.

Guoxuan Hi-Tech:

Similar to the Ningde era, Guoxuan Hi-Tech has already laid out positive and negative electrodes, diaphragms, electrolytes and precursors and other fields. In May 2021, Guoxuan Hi-Tech Yichun Lithium Power New Energy kick-off meeting was officially launched. the project has a total investment of 11.5 billion yuan and is divided into two phases, mainly engaged in mine resources development, lithium carbonate extraction, lithium battery R & D and manufacturing, energy storage system development and so on.

In March, Guoxuan Hi-Tech also plans to invest 12 billion yuan to sign an investment cooperation agreement with the Feidong county government to build a power battery industry chain project.

In the same month, Hefei Guoxuan Hi-Tech Power Energy Co., Ltd., a wholly-owned subsidiary of Guoxuan Hi-Tech, invested a total of 100 million yuan to set up two wholly-owned subsidiaries, Hefei Guoxuan Recycling Technology Co., Ltd., and Hefei Guoxuan New Materials Technology Co., Ltd.

Yiwei lithium energy:

Since entering 2021, Yiwei LiNeng is not unwilling to lag behind in the layout of upstream raw materials. Up to now, it has laid out lithium iron phosphate cathode materials and high nickel ternary cathode materials respectively through joint ventures with German Nano and Bertre, while the operation of taking a stake in Huayou Cobalt Industry has also enabled it to successfully complete the layout of upstream cobalt and nickel resources.

In terms of lithium resources, Yiwei LiNeng issued two announcements on July 9 that it plans to invest 140 million yuan to acquire 28.125 percent of the shares in Jinkunlun Lithium Industry, and to invest no more than 1.8 billion yuan in the construction of a project with an annual production capacity of 30,000 tons of lithium carbonate and lithium hydroxide. Another plan is to invest 110 million to acquire a 5% stake in Dahua Chemical Co., Ltd. the main purpose of the latter is to win the mining right of Dachidan Salt Lake owned by Dahua Chemical Industry. Further grasp the more upstream lithium resources.

It is worth mentioning that after the release of new energy production and sales in June, the China Automobile Association raised its forecast for new energy vehicle sales for the whole of 2021 to 2.4 million vehicles from the original 2 million. This news also means that the installed capacity of power batteries will be greatly increased in the future. According to the data of the first half of the year, in the past six months, China's power battery production totaled 74.7 GWH, an increase of 217.5% over the same period last year, and the installed capacity was about 52.5 GWH, an increase of 200.3% over the same period last year.

In order to cope with the explosive demand for power batteries, the planned production capacity of domestic head enterprises in 2025 has reached more than 200GWh, which also means that the demand of these mid-stream enterprises for upstream raw materials will continue to grow in the future. In order to control costs and alleviate the shortage of raw materials, the market expects more battery companies to lay out upstream raw materials in the future.

In the short term, SMM research shows that the recent lithium carbonate prices remain stable, Qinghai and Jiangxi industrial, quasi-electric carbon quotations rose, but sporadic transactions. At present, the smelter still has a small amount of inventory, but it has been significantly improved compared with April and May. In the third quarter, the procurement volume of iron and lithium customers began to grow for the second half of the year, and the market price is expected to rise at the end of the month.

Lithium hydroxide, in July, major manufacturers still have annual maintenance, the spot market supply reduction, downstream procurement is becoming more and more difficult. The output of caustic chemical plant has increased, but it has not been able to solve the urgent needs, and prices are expected to continue to rise in the future. "View details

Citic Construction Investment previously predicted that it is already the best allocation node of lithium resources. In terms of supply, although some new production capacity of lithium carbonate has been landed in the second half of 2021, its actual market capacity may still be limited, while lithium hydroxide, at present, is still continuing the tight supply situation; on demand, the demand for new energy vehicles in the first half of 2021 is already obvious, and the demand for new energy vehicles is expected to continue to be strong in the second half of the year.

Therefore, under the current supply and demand structure, CITIC Construction Investment believes that the structural shortage of lithium resources may continue into the second half of 2021, and the price increase of lithium hydroxide and lithium carbonate is more deterministic. However, we still need to focus on the impact of lithium carbonate capacity expectations on its prices.