"Some links, some enterprises, only care about the immediate interests, the pursuit of short-term profits, which is not conducive to the development of the industry, but also not conducive to the enterprise itself, the supply chain is interlinked, Anneng alone?" At the annual meeting of gaogong lithium battery in December 2021, Zeng Yuqun, chairman of CATL, expressed disappointment at the price increase of some links and enterprises.
Zeng Yuqun's voice has not fallen, and the price of new energy continues to rise. In March, a number of new energy vehicle company officials announced price increases, including Tesla raised 143-30,000 yuan, BYD raised 3,000-6,000 yuan, Xiaopeng raised 10,100-20,000 yuan, and Euler raised 6,000-7,000 yuan. According to statistics, nearly 20 new energy vehicle companies have announced price increases.
Price increases have become a must for all car companies. "At present, the brand that has contracted with battery manufacturers to rated the price increase of batteries in the second quarter has basically announced the price increase immediately." If there is no price increase, most of them have not yet been negotiated, and the price will generally increase immediately after waiting for the negotiation. Ideal Auto Chairman Li Xiang said on social media on March 19. On March 23, Ideal Announced a price increase.
For the reasons for this round of price increases, all parties have pointed the spearhead at the "rise in upstream raw material prices". From Zeng Yuqun's speech to Li Xiang's judgment, it can be seen that the proceeds of this round of price increases did not flow to battery companies and vehicle companies, but to enterprises that are more upstream of the industrial chain.
Who is behind it?
At the same time that car companies have raised their prices one after another, upstream raw material companies have issued good reports. On March 15, a raw material company issued an announcement that from January to February 2022, the company's lithium concentrate production increased by about 39% year-on-year, sales increased by about 56% year-on-year, lithium concentrate revenue is expected to increase by about 366% year-on-year, lithium compounds and their derivatives revenue increased by about 492% year-on-year.
As the world's largest producer of lithium mines, the raw materials company owns two mines in Australia and Sichuan. Among them, the Australian mine is the world's largest hard rock lithium mine, with lithium resources of about 13.1 million tons of LCE, and proven and approximate lithium reserves of 8.3 million tons of LCE.
As the world's fourth-largest producer of lithium compounds, the raw materials company supplies downstream companies with lithium compounds and derivatives such as lithium carbonate, lithium hydroxide and lithium metal. In the first three quarters of 2021, Tianqi Lithium produced 23,720 tons of lithium carbonate, 3,510 tons of lithium hydroxide and 414 tons of lithium metal.
Lithium carbonate and lithium hydroxide are important raw materials for the production of power batteries. Lithium carbonate is mainly used in the production of lithium iron phosphate and low-to-medium nickel cathode materials in ternary materials (NCM 111, 523 and part 622), while lithium hydroxide is mainly used in the production of high nickel cathode materials in ternary materials (part NCM622, all NCM811, 90505 and NCA).
Affected by the strong demand in the new energy market and the epidemic and other factors, the prices of lithium carbonate and lithium hydroxide as raw materials have risen sharply. According to data from Shanghai Nonferrous Metals Network, on March 23, 2022, the average price of battery-grade lithium carbonate and lithium hydroxide reached 503,000 yuan / ton and 491,500 yuan / ton, respectively.
According to the information disclosed by the raw material company, in 2020, the prices of lithium carbonate and lithium hydroxide were 10,257 US dollars / ton (about 65,000 yuan / ton) and 12,759 US dollars / ton (about 81,000 yuan / ton), respectively, which means that their prices have soared by more than 670% and 500% in two years.
Although the strong demand for new energy market objectively promotes the rise in raw material prices, industry experts believe that this round of price surge is an irrational price increase. Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers, believes that from the perspective of subjective factors, this wave of soaring prices of important raw materials is out of line with the law of market development, which cannot be simply attributed to the contradiction between supply and demand, which is an irrational price increase.
"One of the important pushers behind it may be that some people are hoarding goods, resulting in shortages and local supply and demand contradictions." At the same time, there may be a suspicion of artificial speculation, and there are some capital forces behind it. The speculators may believe that the current production capacity of many projects under construction in the upstream of the industrial chain has not been fully utilized, which is an important window period for them to take advantage of the opportunity to 'catch a big profit'. Chen Shihua said.
Behind a 500% surge in profits
The raw materials company said in the material, "We are the only lithium producer in China that achieves 100% self-sufficiency and full vertical integration of lithium ore through a large, consistent and stable supply of lithium concentrate." ”
Vertical integration enables it to mine lithium ore and produce lithium compounds and derivatives at the lowest cost. According to the disclosed data, in 2020, the production cost of lithium hydroxide of the raw material company was 6,585 yuan / ton (about 42,000 yuan / ton), which is in stark contrast to the current selling price of 491,500 yuan / ton.
The windfall profit is reflected in the irrational rise in lithium prices, and it is also reflected in the 2021 financial report. In the first three quarters of 2021, the raw material company's procurement costs of lithium concentrate, energy, labor and other costs were 1.1756 billion yuan, an increase of 31% year-on-year, but in the same period, its revenue increased by 59%, and its profit soared by nearly 500%.
Gross margin, on the other hand, continued to grow. In the first three quarters of 2021, the gross profit margin of its lithium concentrate sales reached 58.8%, the gross profit margin of lithium compounds and derivatives reached 49.3%, and the total gross profit margin was 53.1%. In contrast, in the first three quarters of 2021, the gross profit margin of CATL was 27.51%, and the gross profit margin of NIO was 19.5%.
Upstream raw material enterprises have sucked most of the profits of the industrial chain, and this round of irrational price increases in raw materials will further exacerbate the tension of the industrial chain, squeeze the profit margins of downstream power batteries and vehicle companies, and increase the cost of car purchases for end consumers, ultimately hurting the emerging new energy automobile industry.
"We can pursue higher profits and maximize interests, but we cannot disrupt the healthy development order of the new energy automobile industry, let alone disrupt the good development momentum created by China's new energy automobile industry after more than ten years of hard work." Chen Shihua said.
"Doing our best to reduce costs and realize the cost competitiveness of new energy vehicles as soon as possible is the common goal and common task of the whole industry chain." Some links, some enterprises, only care about the immediate interests, the pursuit of short-term profiteering, which is not conducive to the development of the industry, but also not conducive to the enterprise itself, the supply chain is interlinked, can be alone? Zeng Yuqun also expressed disappointment at the price increase.
This round of soaring lithium prices has also attracted the attention of regulatory authorities. Recently, the relevant departments held a symposium on the operation of the lithium industry and a symposium on the price increase of upstream materials for power batteries, and industry organizations such as the China Nonferrous Metals Association and the China Association of Automobile Manufacturers, and key upstream and downstream enterprises in the upstream and downstream of the industrial chain such as lithium resource development, lithium salt production, and power batteries participated in the meeting.
As a participating enterprise, the China Association of Automobile Manufacturers put forward three suggestions, one is to promote the return of upstream raw material prices to rationality as soon as possible; the second is to strengthen the upstream and downstream supply and demand docking of the new energy vehicle industry chain; and the third is to ensure the supply of medium- and long-term power battery raw materials.
"We believe that through the efforts of all parties, the problem of excessively rapid rise in raw material prices will be solved, the price of power batteries will return to rationality, and the goal of ensuring stable supply and stable chain will be achieved." Chen Shihua said in an interview.