Source of this article: Times Finance Author: Liao Wei
"Upstream materials are rising too fiercely." On the evening of January 6, insiders of Jiangsu Tafier New Energy Technology Co., Ltd. lamented to Times Finance that "this wave of price increases is mainly due to the mismatch between market supply and demand, excessive downstream demand, and relatively insufficient upstream supply."
Since 2021, the new energy vehicle market has ushered in explosive growth, and the price of battery-grade lithium carbonate, the main raw material for new energy vehicle power batteries, has risen. It is understood that the price of battery-grade lithium carbonate has increased by about 420% in the past year. For reference, the price of battery-grade lithium carbonate in January last year was 72,000 yuan / ton.
Since the beginning of this year, lithium carbonate has even risen to the "seafood price", one price a day. According to the data released by Shanghai Nonferrous Metals Network on January 6, after pulling up 10,000 yuan / ton in a single day on January 5, the battery-grade lithium carbonate quotation rose again on January 6, reaching a price of 292,000 yuan / ton to 300,000 yuan / ton, and the average price of 296,000 yuan / ton rose by 8,000 yuan from the previous day, up 6.47% from the beginning of the year.
In addition, the increase in other lithium battery materials in the past year is also very amazing, business agency data show that in 2021, lithium hydroxide, magnesium prices to achieve 317%, 214% of the annual increase.
It is worth mentioning that under the tide of multiple rounds of lithium material price increases, the ecology of the new energy industry chain has been tested. Some people in the new energy industry said, "In 2022, the focus of the industry should be on how to develop the industrial chain sustainably and healthily." If the upstream price increase is so severe, the downstream eats the last meal without eating, talk about development"?
Source | The price of network lithium resources has risen, and battery factories have borne it?
"This price increase is mainly a mismatch between supply and demand, and the market gap is too large." Now the development of new energy vehicles is too fast, the current market, industrial grade or brine (lithium carbonate) are used to do battery grade lithium carbonate. On the evening of January 6, Li Chao (pseudonym), the person in charge of an upstream material supplier, told Times Finance.
It is understood that lithium is known as "industrial monosodium glutamate", which has been limited to the application of traditional industrial fields for a long time, and supply and demand are relatively stable. However, in recent years, driven by the electric vehicle industry, the demand for lithium has exploded, and its price has also risen in a straight line, squeezing the demand of traditional industries.
Source | pexels.com
"(Lithium price increase) lost a lot of old customers, there are also new (customers) to supplement, in general, in this outlet (company development) is no problem." Li Chao said.
"Our industry, if we predict the market, more or less will hoard some goods, in this big market will definitely make money." If you don't stock up on goods, you may make a small profit. We have a certain amount of hoarding, but the amount of in and out is relatively large, and there are not many hoards at present. Due to the early prediction of the price increase of lithium materials, Li Chao's company has made some preparations, and for the company's development in 2022, Li Chao said, "This year's market will definitely make money for us, or it is quite good."
Or because of the identity of the upstream businessman, or thanks to the early prediction of the market, the impact of the material price increase on Li Chao's company is not large, but the power battery factories and car companies in the middle and lower reaches of the river are under pressure.
"In 2021, we basically don't make any money." On the evening of January 6, an insider of Jiangsu Tafir New Energy Technology Co., Ltd. told Times Finance that "our battery factory almost bears most of the cost of lithium resource price increases in 2021."
Tianfeng Securities previously released a research report that due to the market quotation of raw material prices, the actual purchase price of battery companies is lower than the market quotation, and the product performance, yield, and group rate of battery companies are improved, which can hedge the pressure of rising material costs. It is predicted that the actual increase in the cost of battery companies is about 20%-25%. Considering that long-term cooperation, bargaining power, procurement volume, account period, etc. will also have an impact on the actual purchase price of batteries by the vehicle factory, and the vehicle factory may form a compensation agreement with the battery factory on the price difference, the increased cost of the battery will be transmitted to the downstream but will not be fully transmitted to the downstream vehicle factory, and the purchase price of the battery at the end of the vehicle factory may actually increase by about 10%-20%.
According to the 2021 semi-annual report, the revenue of battery manufacturer Fu Neng Technology in the first half of the year was 877 million yuan, an increase of 207% year-on-year, and the net profit attributable to the shareholders of the listed company was -226 million yuan, a loss of 175 million yuan in the same period last year, and the net profit growth rate of battery companies such as Penghui Energy and Guoxuan Hi-Tech could not keep up with the growth rate of revenue. Ganfeng Lithium, Luoyang Molybdenum and other upstream material suppliers are indeed a different scene, of which ganfeng lithium net profit growth rate of more than 10 times the revenue growth rate.
"The price of lithium materials will increase, and the cost will increase. We predict that this year's lithium price increase may be similar to 2021. From the perspective of the entire industry, whether it is price increases or cost control, it is impossible for everyone to put themselves in a state of loss for a long time. The aforementioned Tafir insider also said, "I believe that in this market, every battery factory will want to increase the price, but whether it can succeed or not is determined by comprehensive factors, which depends on the company's overall cost, customer willingness, etc."
According to times finance and economics, under this market, power battery manufacturers such as Fu Neng Technology and Guoxuan Hi-Tech have also made price adjustment plans. Previously, some analysts told Times Finance, "In this market, electric vehicles in 2022 will either increase in price or reduce allocation." An insider of a mainstream new force car company told Times Finance on January 7, "Recently, some of our products have also been adjusted, but mainly to cope with the decline of subsidies."
2023 may have the opportunity to usher in a market turnaround
"The price of lithium materials will definitely show an upward trend in recent years, and there may be fine-tuning in the middle, but the price will eventually go up and will be very firm." Li Chao said, "But this is all market behavior, it is difficult to intervene artificially." For us, the price of lithium carbonate and other materials is maintained at a price of more than 100,000 yuan a ton is the best, the customer base will be more stable, we are more comfortable, everyone is happy. Desperately increasing the price of materials is unhealthy for the entire industry, and of course we also hope that material prices can stabilize."
A securities institution that holds the same attitude as Li Chao. According to the research report of Zhongtai Securities, the stock market at the end of the year pushed up the price of lithium carbonate to accelerate the upward trend. In addition, the prosperity of the global new energy industry continues to rise, the Sino-US and European electric vehicle markets resonate, and the upward trend of upstream raw material prices continues to strengthen. Recently, Guojin Securities released a lithium expert exchange report that the increase in lithium carbonate production is quite limited, but the demand increase is sufficient, and it is likely to rise to 500,000 / ton.
"There are reasons why downstream demand is too large to far exceed the current supply, there are also geopolitical factors, and the release of water from the US dollar has also pushed up the price of lithium materials." For the mismatch between supply and demand of lithium materials and the tight supply side, some senior industry insiders have analyzed it. Mo Ke, founder of the True Lithium Research Institute, pointed out that there are more and more speculative behaviors for the purpose of arbitrage in the capital market, the increasing difficulty of small and medium-sized enterprises in the gradual withdrawal, and the phenomenon of sellers selling buyers hoarding goods this year has become the norm, which has also exacerbated the tight supply of lithium resources.
Ganfeng Lithium Jiangxi Xinyu Factory | The source of the picture is the official website of the enterprise
Guotai Junan said in the research report that 70% of China's lithium resources need to be imported. The senior person in the lithium battery industry told Times Finance that "although the domestic lithium resources reserves are considerable, but limited by mining technology and cost, raw materials mainly rely on imports." However, the epidemic situation abroad is serious, the output of lithium miners is relatively low, and the domestic supply mainly depends on domestic output, but the domestic is limited after all."
"It may be that in 2022, everyone will be more miserable, next year's market should have a more obvious change, the supply will be released, the price will fall, 2024, 2025 may be better." However, the shortage phenomenon will still exist, roughly in a dynamic balance, the situation will be better than now. Different from Li Chao and some institutions' analysis of the continuous bullish price of lithium, the above-mentioned Tafer insider said, "It takes time for material suppliers to expand production, expand and even release capacity, and the extraction cycle of a lithium mine is 5-7 years, and the extraction cycle of a lithium salt is two to three years." According to the current situation, lithium ore is there, some upstream manufacturers have gradually expanded production capacity in 2020, it is estimated that in 2023, the supply of resources in the market will be more obviously improved."
It is understood that Ganfeng Lithium, China's largest producer of lithium compounds and the world's largest producer of lithium metal, has begun to expand production since 2020. In 2021, more than 10 upstream material suppliers such as Tianqi Shares, Fulin Seiko, Chuanfa Longmona, Bank of China Cashmere, and Tianyuan Shares also issued announcements to accelerate the construction and expansion of lithium carbonate and lithium iron phosphate related projects.
Guojin Securities released a lithium expert exchange report that many projects on the supply side are put into production in the second half of 2023 or even at the end of the year, and it will take time to debug after the completion of the production line, and there will not be much increment in 2023, and there will still be a shortage of supply. The shortage of supply in 2024 or 2025 will be alleviated, but it will not be completely reversed by the shortage of supply, this phenomenon will not happen, at best, the severity of short-term shortage will be weak.
In addition, another industry insider pointed out that even if the supply shortage in two or three years, the damage to the entire industry caused by the price increase is immeasurable. Mo Ke posted that the downstream demand is too strong, the phenomenon of resource card neck in 2022 may be more prominent, and the competent authorities will not be willing to see the development results of the domestic new energy industry harvested by foreign countries. Perhaps the demand will be appropriately curbed at that time, and some policies will be introduced to curb the overheating of electric vehicles.
"The government has intervened a lot to support the development of the new energy industry, and in the current situation, (the government) may not necessarily intervene again, and may be dominated by the market." The Aforementioned Tafer insider said that the current short-term costs are mainly borne by battery factories. But in 2022, the battery will definitely increase in price, the head of the new energy vehicle companies will certainly increase the price appropriately, so that it will give the battery factory a certain space, and when the next round of price increases comes, the battery factory can last for a while. In the entire industrial chain, the upper, middle and lower reaches of each stage bear a little, and there is certainly no problem in holding out until 2023, and it is not possible to talk about how much impact and damage to the ecological ecology of the industrial chain.