Financial Services Association, April 9 (Reporters Zeng Chuchu and Liu Yue) Tianci Materials (002709.SZ) held its 2023 annual results meeting today to respond to investors' concerns about lithium battery raw materials industry trends and the company's future plans. Xu Jinfu, chairman of the company, said at the meeting that the price of electrolytes has reached the bottom level, but the supply still exceeds demand. It is expected that profits will return to a reasonable level after the industry's backward production capacity is cleared. In this context, the company will focus on promoting overseas project construction and integrated construction this year.

The rapid expansion of production capacity in the lithium battery industry chain came to fruition last year. The price of raw materials for superimposed lithium batteries was drastically reduced, and the overall profitability of raw material companies declined. Tianci Materials was no exception. Net profit in 2023 plummeted by nearly 70% year-on-year.

Due to overcapacity in the industry, electrolyte prices experienced a “drop in” in 2023. Tianci Materials revealed in its annual report that in 2023, the company's electrolyte design capacity was 905,600 tons, and the capacity utilization rate was only 39%-63%.

According to today's data from the Shanghai Steel Union, the average price of lithium iron phosphate electrolyte in the market is 22,200 yuan/ton, which is at a low level in recent years.

Regarding future capital expenditure priorities, Xu Jinfu said that the company will focus on promoting overseas project construction this year. Earlier, during an investor exchange event on January 19, Tianci Materials also stated that for electrolytes and lithium hexafluorophosphate, the company will focus on expanding production capacity in overseas markets, and the company will not invest in large-scale production capacity or build new projects domestically in the next few years.

Earlier, Tianci Materials stated in its annual report that as the domestic electrolyte market becomes saturated and competition intensifies, domestic electrolyte exports overseas will become a clear main line in the future, and export volume will gradually increase. At the same time, it will also place higher demands on the global supply capacity of leading companies.

Regarding domestic divisions, Tianci Materials said it will focus on promoting integrated production capacity expansion for core products and raw materials, such as lithium carbonate smelting, the second phase of the 300,000-ton iron phosphate project, and capacity building for some core additives and specialty chemicals.

Judging from domestic integration construction, Tianci materials are gradually being deepened. According to public information, the company currently sells electrolytes, with an annual production capacity of about 850,000 tons, iron phosphate production capacity of 180,000 tons, and reduced annual production capacity of lithium hexafluorophosphate of about 112,000 tons. In terms of lithium carbonate as a raw material, the company has now formed a business layout such as battery dismantling and recycling, and high-purity lithium carbonate purification.

Regarding future market growth, Tianci Materials said that according to the current market situation, the company's downstream products account for more than 70% of power batteries, energy storage batteries account for about 15% to 18%, and consumer batteries account for no more than 10%. According to third-party data forecasts, the overall growth rate of energy storage batteries will be faster in the next few years, but they will still be dominated by power batteries.