The market is panicking again, as the Shanghai Composite Index's drop of three points today has completely undone the small gains made a few days ago.

The tone of the pullback has continued since early November, but it can still be observed that themes derived from popular sectors are being heavily favored by funds.

For example, the solid state battery, the industry chain has not yet fully materialized, but just a few pieces of news have led some concept stocks to experience ten consecutive limits.

What exactly is the situation behind such frantic speculation?

01

The high ground has long been occupied.

Recently, with the resurgence of the solid state battery concept, rumors about guangxi yuegui guangye holdings joining the solid state battery industry chain have once again arisen, driving the stock price to show exceptionally strong gains.

During the 12 trading days from November 7 (Thursday) to this Friday, the company's stock price hit the daily limit up 11 times, and since last Monday, it has been limit up for 10 consecutive days, with a total increase exceeding two times.

It is worth mentioning that in April this year, guangxi yuegui guangye holdings released an announcement clearly stating that the company has no materials for new energy solid state batteries and no related investments in solid state batteries. The company’s iron sulfide ore also contains no arsenic, antimony, bismuth, nickel, cobalt, and other components.

Shortly after the release of that announcement, the hype around the solid state battery concept in the first half of the year gradually faded.

This time it’s vastly different; investors no longer care about any clarifications. If they say you have it, then you have it; let’s just raise the price first.

Why has this resurgence sparked such large waves?

This turning point mainly lies in the change in market liquidity. The trading heat of the past three months has shown a significant difference compared to the first half of the year, as can be seen from the trading volume.

In the first eight months, the daily average trading volume in the all market was less than 800 billion, but after nearly three months of growth, the daily average trading volume has risen to nearly one trillion as of yesterday.

Market activity is increasing, and combined with some influential news in the industry, the themes are easier to heat up, and the duration of the market trend is also longer.

Secondly, the progress of solid state batteries in the second half of the year is indeed very rich, and heavy news has been continuously reported in recent months.

First of all, there is news that contemporary amperex technology is increasing its investment in solid state batteries, with the research and development team expanding to 1,000 people, and in recent months, three solid state battery patents have been released in succession. According to insiders, the current focus on sulfide solid state battery schemes can improve the battery energy density to 500Wh/kg, and has recently entered the sampling stage for 20Ah.

The 20Ah sample phase also means that the battery scheme has been initially defined and has entered the stage of exploring production technology.

What is surprising is that huawei has joined the competition in solid state batteries. From a recently disclosed patent, the technical route is the same sulfide solid state battery as contemporary amperex technology.

At this point, it is possible to understand why guangxi yuegui guangye holdings was suddenly hyped up as having received immense wealth.

The two technology giants in the new energy sector have both chosen the sulfide route, where lithium sulfide is the most critical raw material. Its purity directly affects the electrical conductivity and chemical stability of solid state batteries, and its cost is significantly higher than the other two routes.

If the technological route can be applied on a large scale in the future, the utilization value of the source pyrite will inevitably increase, and Guangxi Yuegui Guangye Holdings' Yunli Mine operates pyrite.

According to a previous announcement by Guangxi Yuegui Guangye Holdings, Yunli Mine has proven pyrite reserves of 0.208 billion tons, which accounts for 85% of the national rich resource of pyrite, with an average grade of 31.04%, high quality, and has always maintained a leading position in the domestic high-quality pyrite industry.

As of the first half of the year, Yunli Mine holds pyrite resources of 104.58 million tons within the scope of its mining license. Among them, the resource amount within the open-pit mining boundary is 39.02 million tons, the resource amount outside the open-pit mining boundary is 31.9 million tons; the underground mining part holds a resource amount of 33.66 million tons.

Such a large reserve advantage allows the company to occupy an absolute monopoly resource advantage in the solid state battery ecological niche.

Driven by Guangxi Yuegui Guangye Holdings, the concept stocks of pyrite in the A-share market have also seen a frenzy of涨停, with several listed companies that own pyrite resources, such as Anhui Sierte Fertilizer Industry, Kunming Chuan Jin Nuo Chemical, Zhejiang Zhongxin Fluoride Materials, Anhui Huilong Agricultural Means of Production, Anhui Liuguo Chemical, and Sichuan Development Lomon, all experiencing涨停 successively.

Earlier last year, when a new solid state battery product was just launched, the market was still entangled in whether it was a shell marketing tactic, and semi-solid made people think it was fully solid.

However, with breakthroughs in various technological routes and the news of the latest layout by industry giants, market expectations for solid state batteries are no longer just empty shell imaginations, but focus on when they can be officially mass-produced and how the penetration rate curve will rise.

02

When will mass production occur?

Looking back at the discussion on solid state batteries, the requirements for range, charging speed, and safety in downstream application scenarios are the main reasons driving the rapid development of solid state batteries. In just under a year, from the introduction of semi-solid batteries to many downstream car companies successively equipping fully solid state batteries this year.

Compared to liquid and semi-solid batteries, fully solid state batteries have a larger working temperature range, stronger battery stability, and upgraded materials result in higher energy density. Additionally, removing the separator reduces the overall volume and saves space.

Semi-solid batteries are just a middle path, with an energy density limit of only 500Wh/kg. Although the current process level of fully solid state batteries is roughly at this level, with advances in technology, they could theoretically reach 900Wh/kg.

For battery companies, this represents a deeper moat and a greater premium space for technological investment. However, the difficulty of implementing different technological routes varies, and companies that choose the more expensive sulfide route are often those with stronger financial capabilities. The industry anticipates that mass production will be achieved as early as 2026.

At the same time, overseas competitors who have already fallen far behind china in liquid lithium batteries are also preparing to take this opportunity for a curve overtaking.

For example, honda motor has just announced that it will start trial production of solid state batteries from January next year and will promote cost reduction to compete with chinese companies.

However, what can really accelerate progress will likely still need to follow the rhythm of chinese companies.

The earliest to begin research and development of solid state batteries was toyota motor, which claimed early on to start mass production in 2027, but with reversals, it is feared that it will be after 2030.

At the power battery conference in September this year, contemporary amperex technology, which follows the same technical route as toyota, revealed that it might achieve small-scale production by 2027.

The reason for the conservative expectations is because the processes and cost challenges of sulfide are among the most difficult of all technical routes.

The high energy density of sulfides comes from their very high ionic conductivity and ability to adapt to temperature changes, but the air stability of sulfide electrolytes is very poor, which easily generates toxic gases and also reduces conductivity.

To improve the stability of sulfide solid state batteries, element doping can be adopted, and cathode materials can be coated, or other technical routes can be integrated to form a composite electrolyte, with huawei and contemporary amperex technology both proposing solutions to this problem.

The difficulty in cost lies in the fact that the price of lithium sulfide raw material reaches 1500 to 2000 dollars/kg, which is more than 200 times the current price of electrolyte. Moreover, it is necessary to consider that in order to isolate air, the preparation environment needs to be treated in inert gas or vacuum, and the production process is incompatible with existing battery processes, which will bring additional manufacturing costs.

Therefore, transitioning from liquid to solid state battery feels like inventing a new type of battery. Aside from the need for material improvements, many engineering challenges must be resolved, and there remains a long way to go before achieving mass production.

In April of this year, the Qingdao Energy Research Institute of the Chinese Academy of Sciences achieved a technological breakthrough in sulfide soft pack batteries, and is currently preparing a production line for 20Ah, with plans for mass production in 2026. It is reported that a kilogram-level sulfide electrolyte batch preparation pilot line has already been established.

True mass production, as we understand it, requires finding scalable commercial application scenarios to help upstream quickly reduce costs. However, the demand for these high energy density batteries may only be clear in high-end long-range vehicles, eVTOL (electric vertical takeoff and landing vehicles), and other emerging technology fields like humanoid robots.

Unless costs drop rapidly, sulfides may not be the sole player in the future all-solid-state battery market, and they may not even be a leading route. Lower-cost semi-solid batteries will first enjoy the growth in market share, while large-scale production of all-solid-state batteries will have to wait until after 2027.

For startups, all-solid-state batteries are a tough nut to crack, as they are derived from semi-solid batteries. Companies should first master the more challenging technologies, then develop semi-solid batteries with the positive and negative electrode technology of liquid batteries to meet market needs, and later switch to all-solid-state, making it easier to migrate and adjust production lines, resulting in lower costs.

While mass production is not far off, the battle for the pathway remains a gamble.

03

Epilogue

It is worth mentioning that the main character, Guangxi Yuegui Guangye Holdings, also created historic growth during the two major bull markets in 2008 and 2015, with increases of approximately 168% and 172% respectively.

In other words, the company seems to have become a part of the memory of bull markets.

Guangxi Yuegui Guangye Holdings' main business includes three major sectors: syrup paper, pyrite, and new energy materials.

The company’s predecessor, Guitang Co., was the first listed company in China’s sugar industry and was listed on the Shenzhen Stock Exchange in 1998.

The sugar business accounts for about half of the total, with a projected sugar production of 0.0948 million tons for the 2023-2024 season, an increase of 61.1% year-on-year. The net income for the third quarter surged nearly tenfold, with significant profit fluctuations over the past three years.

Since 2015, income generated from Yun Sufeng Mining has accounted for about 20% of the total revenue of Guangxi Yuegui Guangye Holdings. The rise in prices of pyrite raw materials and products is the main performance driver, with the proportion of sulfur concentrate and sulfuric acid business rising to 32.9% in the first half of the year.

The pyrite resources of Guangxi Yuegui Guangye Holdings are likely to play an important role in the solid state battery industry chain in the future and are seen as an options opportunity, quickly recognized by speculators in the A-share market. However, this all hinges on whether the solid state battery can truly become a new mainstream product and achieve mass production, which still has many uncertainties. (End of the text)