Power lithium industry: battery price loosening industry profit is expected to be repaired step by step

The price of lithium battery materials has risen sharply, and the cost of batteries has increased significantly. Due to the mismatch between supply and demand, the prices of some lithium battery materials have risen sharply since 2021, including PVDF, lithium carbonate, lithium hexafluorophosphate and other materials, which affected the prices of core materials such as electrolytes and cathode materials. According to our estimates, represented by the four time nodes of March 31, 2021, June 30, 2021, and September 30, 2021, the cost increased by about 15%, 20% and 40% respectively compared with the beginning of the year.

The profitability of the battery business is under pressure in the first three quarters of 2021, and the overall profitability is expected to be repaired one after another with the loosening of battery prices. Due to rising costs and constant product prices, the gross profit margin of power batteries declined in the first half of 21, and we expect the impact to continue in the third quarter. With the continuous increase of cost pressure and the continuous improvement of downstream demand, we believe that on the one hand, battery enterprises further smooth the impact of follow-up price fluctuations through the long-order model, on the other hand, leading battery enterprises may transmit cost pressure through direct price increases or the establishment of a linkage mechanism between terminal prices and the prices of major materials, and the profitability of battery enterprises is expected to recover gradually.