GE Fanmei, New Energy Industry Group of Investor Network
Since the beginning of this year, the lithium sector has ushered in a period of explosion thanks to the hot new energy track, particularly the continued rise in the Wind lithium iron phosphate battery concept index, which rose as much as 85.17% from the beginning of this year to December 10, while the CSI 300 index fell 3% over the same period.
The hot concept of battery is accompanied by the upsurge of lithium iron phosphate industry. SMM historical price data show that as of December 10, the price of lithium iron phosphate (power type) is 92000 yuan / ton, and the price of lithium iron phosphate (energy storage type) is 86500 yuan / ton. Since the beginning of this year, the price of battery-grade lithium carbonate has risen sharply, and driven by cost, the price of power lithium iron phosphate has also risen rapidly, with the average price rising from 39000 yuan / ton in January to about 93000 yuan / ton in the near future, an increase of 138%.
In fact, since the beginning of this year, a number of listed companies have actively increased the layout of lithium iron phosphate business, intensive expansion of lithium iron phosphate production capacity. According to incomplete statistics, the planned annual production capacity of lithium iron phosphate projects announced by listed companies since October alone has exceeded 1 million tons.
Which is better or worse than lithium iron phosphate or ternary materials as cathode materials? Who will become the industry trend? The output of the top 10 enterprises in 2020 accounted for 99% of China's output of lithium iron phosphate materials in 2020. With the promotion of production expansion and the increase of market participants, can the current pattern of head enterprise monopoly be broken?
The market demand is exuberant
Lithium iron phosphate is a kind of cathode material with lithium source, iron source, phosphorus source and carbon source as the main raw materials, and the cathode material is the core material of lithium battery, which accounts for 30% of the material cost of lithium battery, which directly determines the overall cost of lithium battery. it is the material with the largest scale and the highest output value in the lithium battery industry chain, leading the development of the entire lithium battery industry.
Specifically, the lithium battery industry chain is mainly divided into three parts: the front end is non-ferrous metals, fluoride and other resources; the middle is positive and negative electrode materials, electrolyte, copper foil, diaphragm, lithium equipment and other materials; the back end is the battery manufacturer represented by Ningde era (300750.SZ). When the lithium battery industry is booming in 2021, the profit growth at the front end of the industrial chain is even greater, and resource enterprises and raw material suppliers become the biggest beneficiaries.
Lithium battery is the core component of new energy vehicles, and its development is closely related to the new energy vehicle industry. According to the Development Plan of New Energy vehicle Industry (2021-2035), the sales of new energy vehicles in China will reach about 20% of the total sales of new cars by 2025. According to the forecast of the High Industrial Research Institute of Lithium and electricity, the output and sales of new energy vehicles in China will reach 6.25 million and 6.23 million respectively by 2025, with an average annual compound growth rate of about 35 per cent for the 2020-based period.
Driven by the policy, China's new energy vehicles have developed rapidly since the beginning of this year. According to passenger car production and sales data released by the Federation of passengers, from January to November this year, 2.807 million new energy passenger vehicles were wholesale, an increase of 190.2% over the same period last year; retail sales were 2.514 million, an increase of 178.3% over the same period last year; and the penetration rate was 13.9%, significantly higher than the 5.8% penetration rate for the whole of 2020.
With the rapid rise of new energy vehicle market, the demand of power battery industry in China is increasing. According to the statistics of the Lithium electricity Research Institute of High Industrial Research, the compound growth rate of power battery installed in China from 2017 to 2019 is 31.29%, which is the main driving force of global power battery growth. In 2020, the global power battery installed 137.3GWh, an increase of 17.2% over the same period last year, of which China's power battery installed is 63.60GWh, accounting for 46.32%. From January to October this year, the installed capacity of power batteries in China accumulated 107.5GWh, an increase of 168.1% over the same period last year.
Lithium iron phosphate and ternary materials are the two most widely used materials in power batteries of new energy vehicles. In terms of performance, both of them have their own advantages and disadvantages. Specifically, lithium iron phosphate has the advantages of high safety, low cost and long cycle life, as well as low energy density and poor low temperature performance. At present, many enterprises in the industry are studying to improve their energy density by improving the technical route or technological process. Ternary materials have the disadvantages of high cost, short cycle life and poor safety, and have more advantages in energy density and low temperature performance.
Since 2008, lithium iron phosphate batteries have occupied the mainstream position in China's new energy vehicle power battery market by virtue of its low-cost advantages, and lithium iron phosphate shipments have also been growing at a high speed, with shipments of 14000 tons in 2014, an increase of 68 percent over the same period last year, and shipments of 31000 tons in 2015, an increase of 118 percent over the same period last year.
Since 2020, Ningde Times and 002594.SZ have respectively launched "CTP" and "blade battery" technologies, which have improved the energy density of lithium iron phosphate battery, highlighted its advantages such as safety and cost, and promoted its application in the field of new energy passenger vehicles. In addition, popular models such as "Model3", "BYD Han" and "Hongguang mini" have also begun to use lithium iron phosphate batteries.
With the technical route of lithium iron phosphate gradually taking root in the end consumer market, the market of lithium iron phosphate battery is gradually expanding. According to the statistics of the starting Point Research Institute, the global lithium iron phosphate battery market is 51.3GWH in 2020, an increase of 46.5% over the same period in 2019.
The demand for lithium iron phosphate batteries has further increased, and production and sales have also increased rapidly. According to the China Automotive Power Battery Industry Innovation Alliance, the production of lithium iron phosphate batteries was 37.7GWh in the first half of 2021, accounting for 53.4 percent of the total power battery production, while sales volume was 30.8GWh, accounting for 52.9 percent of the total power battery sales, surpassing the production and sales of ternary batteries.
Accordingly, the installed capacity of lithium iron phosphate batteries began to grow rapidly due to the strong demand of downstream customers. Data show that from January to November 2021, the total installed capacity of power batteries in China increased by 153.1% compared with the same period last year. Among them, the installed capacity of lithium iron phosphate batteries reached 64.8GWh, accounting for 50.5%, up 270.3% over the same period last year; the total installed capacity of ternary batteries 63.3GWh, accounting for 49.3% of the total loading, increased by 92.5% over the same period last year, and the installed capacity of lithium iron phosphate batteries surpassed that of ternary batteries.
Listed companies actively expand production
With the rapid growth of demand for lithium iron phosphate battery in China, lithium iron phosphate has a broad market space and is expected to usher in a huge development opportunity. The volume and price of lithium iron phosphate industry has risen, and the prosperity has been greatly improved.
Since the beginning of this year, the price of lithium iron phosphate has continued to rise. SMM historical prices show that the average spot price of power lithium iron phosphate rose from 39000 yuan / ton in January to about 93000 yuan / ton in the near future, an increase of 138%.
SMM believes that new energy vehicle demand volume superimposed iron lithium battery application in new energy vehicles increased in the fourth quarter, iron lithium supply gap is still there, the overall imbalance between supply and demand of lithium iron phosphate continues, will still form a support for the price of lithium iron phosphate, it is expected that the price of lithium iron phosphate will continue to rise with the price of raw materials in the future.
A number of listed companies have heard the wind, targeting lithium iron phosphate cathode materials, and actively expanding the production capacity of lithium iron phosphate.
300919.SZ announced that the company intends to build an integrated project in Kaiyang County with an annual production line of 200000 tons of iron phosphate and lithium iron phosphate, while supporting the construction of phosphate rock to produce phosphoric acid or yellow phosphorus and monoammonium phosphate within the chemical park, as well as supporting mining and phosphate rock mining to meet the demand for 200000 tons of lithium iron phosphate products, with a total investment of about 10 billion yuan, developed by stages, and the construction period of 33 months. On November 30, Zhongwei also announced that it would invest no less than 300000 tons / year of iron phosphate, lithium iron phosphate and related phosphorus resources development and phosphorus chemical supporting projects in Guizhou.
In addition, on December 8, Taihe Technology (300801.SZ) said that the proposed project with an annual capacity of 10,000 tons of lithium iron phosphate high-end cathode materials had completed the project; on December 1, Longbai Group (002601.SZ) announced that it planned to invest a total of 3 billion yuan in Nanzhang County to invest in the construction of an annual capacity of 150000 tons of battery-grade lithium iron phosphate project and other related projects.
In November, Fulin Seiko (300432.SZ) planned to raise an additional 1.5 billion yuan to build 50,000 tons of lithium iron phosphate cathode materials and other projects; 300505.SZ issued an announcement to invest in Fangchenggang City to build 50,000 tons / year battery-grade lithium iron phosphate cathode material iron phosphate and supporting 600000 tons / year sulfur sulphuric acid project, 100000 tons / year battery-grade lithium iron phosphate cathode material project.
On November 19, the two listed companies issued a production expansion announcement on the same day. Among them, China Silver Cashmere Industry (000982.SZ), which already has an annual capacity of 4200 tons of lithium iron phosphate, announced that it would invest 2 billion to build an 80, 000-ton lithium battery cathode material lithium iron phosphate project; and 002312.SZ announced plans to build an annual capacity of 200000 tons of new energy materials in the de An Industrial Park, including 200000 tons of lithium iron phosphate and 200000 tons of iron phosphate production line.
In addition to the above-mentioned enterprises, German Nano (300769.SZ), Huayou Cobalt (603799.SH), Dragon Technology (603906.SH), 002170.SZ and other companies are also actively increasing the production capacity of lithium iron phosphate. Since 2021, the investment layout of relevant companies in lithium iron phosphate has continued, and the number of new lithium iron phosphate projects has gradually increased.
According to the data disclosed in Zhongwei's announcement, of the planned additional production capacity in China in the first half of 2021, 372000 tons are lithium iron phosphate projects, significantly higher than 184000 tons for lithium carbonate projects and 230000 tons for ternary materials projects. According to incomplete statistics, since October, China plans to add a total of more than 1 million tons of lithium iron phosphate production capacity, far exceeding the actual capacity in 2020.
Soochow Securities said in the research report that in addition to the traditional lithium iron phosphate enterprises have expanded production, phosphorus chemical industry, titanium dioxide and other production enterprises have cut into the iron phosphate and lithium iron phosphate industry chain by virtue of their respective resource advantages to develop the second growth curve. With the development of iron phosphate / lithium iron phosphate towards commoditization, the cost of integration is king. In addition to the cost factor, due to the high concentration of battery manufacturers in China, it is very important to bind downstream battery customers.
In the downstream market, lithium battery head enterprises have accelerated the expansion of lithium iron phosphate projects. For example, BYD's power battery projects in many places across the country since 2020 are almost lithium iron phosphate "blade battery" projects; in February and March 2021, Yiwei Lithium Energy invested 1 billion yuan and 3.9 billion yuan respectively in lithium iron phosphate battery projects; in addition, Ningde Times, Ruipu Energy, Honeycomb Energy and AVIC Lithium Power are also actively adding lithium iron phosphate capacity layout.
The Matthew effect in the market is intensified.
According to statistics from the big data Center of the China Battery Industry Association, China produced about 143000 tons of lithium iron phosphate in 2020, an increase of 60.7 percent over the same period last year. Among them, the output of the top 10 enterprises accounted for 99% of China's lithium iron phosphate output in 2020.
Specifically, the output of lithium iron phosphate is mainly monopolized by five enterprises: German Nano, Hunan Yuneng, Guoxuan Hi-Tech, Betteri and Hubei Wanrun, with a market share of 20%, 15.2%, 14.6%, 14.1% and 12.4%, respectively. Together, the output of these five enterprises accounted for 76% of China's lithium iron phosphate output in 2020, an increase of 13 percentage points over the combined output of the five enterprises in 2019, and the output concentration of lithium iron phosphate materials enterprises further increased.
Data from Soochow Securities show that in 2020, China will have a production capacity of 347000 tons of lithium iron phosphate. With the rapid growth of supply and demand of lithium iron phosphate, Guoxin Securities expects that from 2021 to 2025, the production capacity of lithium iron phosphate will be 811000 tons, 1.526 million tons, 3.872 million tons, 4.2 million tons and 4.505 million tons respectively, with a corresponding gap of-13000 tons, 276 million tons, 671 million tons, 2.619 million tons and 2.42 million tons, respectively. The shortage between supply and demand will gradually ease, and there will be a substantial surplus of lithium iron phosphate capacity after 2023.
It is worth noting that the planned new capacity release of lithium iron phosphate still takes time. Most of the announced capacity construction cycle of lithium iron phosphate is 3-5 years, and the timing of overcapacity depends on the pace of production capacity release on the supply side. Specifically, Fulin Seiko said in the announcement on the expansion of lithium iron phosphate production: "in July 2021, the company plans to increase investment in the construction of a project with an annual output of 250000 tons of lithium iron phosphate cathode material, and start the first phase of the project first. That is, the new project with an annual production capacity of 60, 000 tons of lithium iron phosphate cathode material is scheduled to start construction in September 2021, and the project will be put into production by October 2022. The second phase of the plan-the follow-up company will start at the right time according to the changes in demand of major customers, the expected changes in market demand, the pace of capacity expansion in the industry, and the arrangement of the use of funds. "
At present, the market demand of lithium iron phosphate is strong, and the leading enterprises in the industry have achieved competitive advantage and occupied a large market share through the pursuit of "high quality and low cost" through capital strength, scale effect, customer stickiness, technology accumulation and historical experience. With the steady growth of the market, small and medium-sized enterprises that lack core competitiveness gradually withdraw from the market, and the low-level competition continues to decrease.
Fulin Seiko said in the announcement that the future market competition, on the one hand, pay attention to the reasonable expansion of production capacity, on the other hand, pay more attention to product performance, rapid iteration of technology and industrial ecological cooperation. Cathode materials, battery packaging, automotive "three electricity" (battery, motor, electric control) and other industrial chains will continue to improve, and cooperation within the industry will be closer. In the future, China's lithium iron phosphate cathode material market will form a healthy competition situation dominated by technology and resources in the upper and lower reaches of the industrial chain, and the production capacity of lithium iron phosphate cathode materials will gradually be concentrated to the major enterprises with the advantages of core technology and industrial chain resources. (produced by thinking Finance)