Crazy lithium: 10 times a year, behind the push to take advantage of the opportunity to hype

In just over a year, from 50,000 / ton to 500,000 / ton, this is crazy lithium (lithium carbonate)!

Thanks to the outbreak of the new energy vehicle market, the "industrial monosodium glutamate" lithium, which was not popular in the past, has been transformed into the "white oil" of the new era, and its value has soared, and it is difficult to find a ton.

Such an amazing increase has attracted the attention of many people. On March 26, Wan Gang, vice chairman of the National Committee of the Chinese People's Political Consultative Conference and chairman of the China Association for Science and Technology, also expressed surprise: "Lithium carbonate can actually increase by 10 times in the past year!"

Li Bin, a director of Weilai, pointed out that the price increase of lithium carbonate is speculative, and some people are speculating.

In the past year, the rise in lithium prices has made some traders who hoard goods profitably and achieved a counterattack in life; it has also made power battery manufacturers and automobile companies bitter and unbearable.

Anxiety and worry are spreading. The "blood case" caused by the price increase of lithium carbonate has pushed up the price of power batteries and also transmitted to the end of the automobile sales, and since March, many companies have raised prices and no longer hide it.

This wave of fierce lithium carbonate price increases, although there is an element of speculation, but the root cause is still the imbalance between supply and demand. In the short term, the price of lithium carbonate and power batteries is difficult to fall. This is disastrous for many companies, and the electric industry is about to usher in a major reshuffle.

Some auto brands may disappear from here.

01

Ten times a year

A caught off guard by electric price increases was staged in March.

GAC E-An, Tesla, Chery, Xiaopeng, Nezha, Zero Run, Wei, Cheng'ou la, etc., nearly 20 enterprises have announced price increases, ranging from 3,000 to 30,000.

Even BYD, which produces its own batteries, has not been able to hold on. On March 16, BYD adjusted the price of a total of 39 of its 10 models, ranging from 3-6,000 yuan.

It can be seen that in this wave of price increases in March, few companies continued to hold back. This seems to be a long-suppressed release.

The fuse of this wave of price increases is the sharp rise in the cost of raw materials for power batteries, especially the jump in the price of lithium carbonate, an important cathode raw material for batteries.

SMM (Shanghai Nonferrous Metals) data shows that in just one year, the price of lithium carbonate rose from 54,600 yuan in early 2021 to 516,500 yuan / ton in March 2022.

Under such a huge increase in raw materials, downstream battery manufacturers have also increased prices. Zhang Feng, senior vice president and secretary of the board of directors of Fu Neng Technology, said that the current price increase of power batteries is basically more than 25%.

On March 19, Li Xiang, chairman and CEO of Ideal Automobile, also posted on Weibo that the increase in battery costs in the second quarter was very outrageous.

The Research Report of Orient Securities shows that even if it is a large-scale and high-priced head battery enterprise, its single lock price and raw material locking ability advantages cannot match the price increase rate of raw materials.

On March 21, CATL said that because the price of upstream raw materials has risen sharply, the company will dynamically adjust the price of some battery products.

The cost pressure of battery manufacturers is huge, and it is necessary to avoid "breaking the defense" and having to conduct downwards. The enterprises that have just experienced the decline of subsidies a few years ago have not made a profit, and in the face of menacing high-priced batteries and insufficient production capacity, they have no choice but to choose to increase prices to maintain the balance between profits and production and marketing.

On the one hand, battery manufacturers and automobile companies are caught in a tug-of-war, and on the other hand, the rise in lithium prices has made the mining companies make a lot of money. According to the 2021 annual report of lithium battery giant Ganfeng Lithium, the company's revenue doubled year-on-year last year, and the net profit attributable to the mother more than quadrupled (410%) to 5.228 billion yuan.

Li Liangbin, the founder of Ganfeng Lithium, took advantage of this wave of east wind to soar to 36.5 billion yuan in value, and sat firmly on the throne of the richest man in Jiangxi in the "2022 Hurun Global Rich List".

The lithium industry, which has been mired in losses, has directly landed on the shore by relying on the rise in lithium prices. Its 2021 performance forecast shows that from a loss of 1.83 billion yuan in 2020, it was directly reversed into a profit of 8-2.4 billion yuan, ending a loss of two years in one fell swoop.

02

Who's hyping

The rise in lithium prices has become the "target of public criticism" in the new energy industry, and some people believe that there is a great speculation component.

Chen Shihua, deputy secretary of the China Automobile Association, said that the extraordinary rise in raw material prices in this round cannot be simply attributed to the contradiction between supply and demand, which is an irrational rise, and there is a driving force behind it.

In the process of lithium carbonate becoming a battery, there are about four links, lithium mines - traders - battery manufacturers - automobile companies. Upstream lithium ore/ lithium salt lake Water mining, refining, production as lithium carbonate; It is then made of cathode material by the midstream, and then encapsulated together with other materials as a battery; Finally downstream enterprises purchase installation.

Between the upstream and midstream, there is also a lithium salt trader "mezzanine" similar to a market maker, which has played a role in this round of rise.

Because the vast majority of lithium ore supply is locked in, the liquid lithium ore available for trading in the market is scarce. Since last year, lithium carbonate companies have settled according to the "current price" every day, "customers who ask for purchase do not ask the price, everyone has goods to take." Because there is no excess inventory, even the trust relationship can not get the goods. A lithium carbonate company in Hai said.

In the face of the tight supply of goods, and the huge procurement enthusiasm in the midstream, some traders are suspected of taking the opportunity to hoard goods and speculate to raise market prices.

In the past, traders, as a mezzanine, have been paying and taking risks for manufacturers, and now the "soaring value" of lithium, as a middleman, has the opportunity and conditions to share a piece of the pie, and even manipulate prices.

A number of industry insiders reported that in the third quarter of last year, some traders took advantage of the seasonal production reduction of mining enterprises and actively hoarded goods. After the "interception of the flow and the sale of the sale", the difficulty of downstream procurement has increased, and the price of lithium has been increased.

During the fourth quarter of last year to the first quarter of this year, lithium prices soared again. Xiangcai Securities said that considering the seasonal reduction of salt lake production during this period, the unstable supply of overseas lithium, and the superposition of downstream Spring Festival stockpiling, lithium prices were quickly pushed from 200,000 to 500,000.

In the next link of traders, the main factory and battery factory are competing for market share, and the rapid expansion of production to meet the continuous supply of battery orders from downstream enterprises. In order to avoid the occurrence of "rice-free cooking" and to disperse the uncertainty of the continuous madness of lithium prices, battery factories are also scrambling to hoard raw materials, and panic buying has added fuel to the already outrageous lithium prices.

03

Supply and demand imbalance

What makes less than 40,000/ton lithium carbonate four years ago so crazy? The root cause is still the imbalance between supply and demand.

Along with the rise in lithium prices, in 2021, known as the "first year of new energy vehicles", the production and sales of new energy vehicles have both crossed the 3.5 million mark, soaring 1.6 times.

This trend continues this year. According to the data of the Association, the retail sales of new energy passengers reached 272,000 units in February, an increase of 180.5% year-on-year. From January to February this year, new energy passenger retail sales reached 624,000 units, an increase of 153.2% year-on-year.

All enterprises have put forward amazing production capacity plans and tried to desperately expand production. Tesla plans to increase sales this year by 50 percent from last year, or about 1.5 million units, and 20 million units in 2030.

Ideally, it has a sales target of 1.6 million units in 2025; Xiaopeng also proposed to reach 10% in 2025 with a market share, estimating more than one million units.

The demand for blowouts has led to a shortage of power batteries, and the gap is huge. Previously, SNEResearch predicted that the global demand for electric gasoline for power batteries would reach 406 gigawatt hours by 2023, while the supply of power batteries was expected to be 335 gigawatt hours, a gap of about 18%. By 2025, the gap will widen to about 40 percent.

At the same time, as the main raw material of power batteries, lithium supply is seriously in short supply.

Previously, as a raw material that was not very "red", 80% of the domestic lithium carbonate depended on overseas imports.

In 2020, many factors led to lithium prices into a trough, falling back to ten years ago, several major global manufacturers declared bankruptcy; and in 2021, the new energy vehicle market exploded, the demand for power batteries increased significantly, although some lithium mines have new/expansion plans, but affected by the epidemic delayed or interrupted, production capacity did not keep up.

According to the statistics of the International Energy Agency, the average time from discovery to production in South America salt lakes is 7 years, and the average time from discovery to production of spodumene mines in Australia is 4 years, the production capacity construction cycle is long, the supply of lithium is rigid, and the price of lithium has risen strongly under the contradiction between supply and demand.

The soaring rise of lithium carbonate has aroused great concern from the relevant ministries. On March 16, the Ministry of Industry and Information Technology clearly stated that it would crack down on unfair competition such as hoarding of lithium, nickel and other resources, and raised prices, and interviewed some lithium salt companies to guide lithium salt companies to directly ship to the midstream, "I hope everyone will rise and slow down."

Affected by supervision, the current price of lithium carbonate has fallen below the mark of 500,000 yuan / ton. SMM data As of March 30, the average price of battery-grade lithium iron phosphate has reached the position of 485,000 / ton.

Some brokerage institutions also said that the purchase price of lithium carbonate has begun to loosen, and the actual transaction price is 450,000-500,000 yuan / ton.

The boycott in the lower and middle reaches is also a force. Wall Street has learned that the middle and lower reaches of the cathode factory, battery factory boycotted and abandoned the collection of more than 500,000 high-priced lithium salt, not one or two.

All kinds of signs show that the price of lithium ore has reached a high level, the risk of speculation is extremely high, and the relationship between supply and demand has begun to restructure.

However, to solve the contradiction of demand mismatch, Guorong Securities believes that in the medium term, it will have to wait for the release of overseas Australian lithium mines and the production capacity of Argentina's salt lake.

This means that the gap in lithium is difficult to solve in the short term, and companies still need to endure the constraints from battery prices and supply.

04

Car companies shuffle

The soaring price of lithium and the resulting rise in the price of power batteries have brought a fatal blow to some car companies.

In a new energy vehicle, the cost of power batteries accounts for 30% or 40%. Obviously, this is extremely unfavorable to car companies with low total prices and low gross profit margins.

In the wave of price increases, the pressure on A00-A0 class pure electric vehicles with a price of less than 100,000 is greater. A number of car companies have said that consumers in this range are extremely sensitive to prices.

According to the data of the Association, in January this year, a total of 28 A00-class pure electric vehicles were on sale in the Chinese market, with a price of about 100,000 yuan, of which Wuling Hongguang MINIEV1, Euler black cat and white cat did not exceed 90,000.

Rising costs squeeze a lot of profit margins for the A00 type. According to saic-GM-Wuling Automobile's 2020 financial report, the company's revenue is 72.927 billion yuan, but the net profit attributable to the parent company is only 142 million yuan, which is only 89 yuan distributed to each vehicle.

Even some types have lost money. On February 14, the Euler brand issued a notice asking dealers to suspend the acceptance of orders for Euler black cats and white cats.

On February 23, 2022, Euler brand CEO Dong Yudong frankly said in response to the "suspension of production storm": Although there are advantages in the industrial chain behind the Euler brand, this car still brings huge losses to the company! The loss of black cat alone exceeded 10,000 yuan.

In fact, the reason why the A00 type dared to sell so cheaply before was because under the dual credit policy of new energy vapors, the points obtained from sales electricity have a strong ability to realize.

However, the preferential policy of points is gradually receding, and the pressure of upstream price increases is difficult to transmit to consumers, and enterprises in the middle and low-end markets have become a problem in the face of this round of price increase waves.

On the other hand, high-end car companies are more adaptable. Tesla's orders are not affected by the price increase, the Model3 and Y delivery cycle has been extended to 16 to 20 weeks, and even some models have been scheduled to the beginning of 2023.

Wall Street Wen learned from Xiaopeng Automobile's shop that due to the advance of this price increase three days in advance, even after the price adjustment, sales are very stable.

Guohai Securities believes that the rising price tide will be a reshuffle of the new energy automobile market, and the market share will be further concentrated on high-quality brands. According to the data of the Association, 11 companies did not report sales last year, and from January to February this year, this number rose to 22.

"In the future, 80% of independent brands will shut down, stop, merge and turn, and 90% of the new forces will finish playing." In the entire auto market, the top two companies will face huge survival and development problems, and they may not survive. Zhu Huarong, chairman of Changan Automobile, believes.

At the annual meeting of entrepreneurs in January, He Xiaopeng, chairman of Xiaopeng Automobile, also admitted, "In a few years, the entire intelligent automobile field will enter the Warring States period from the Spring and Autumn Period, from the qualifiers to the knockout rounds." ”

From industrial monosodium glutamate to white oil, the popularity of lithium reflects the extraordinary development of electric vehicles and the beginning of the global energy revolution, but the future is not very clear.

In fact, under the test of the soaring raw materials and the shortage of batteries led by lithium, the elimination of car companies has been accelerating.

"Die before you get out of the school", the new energy vehicle market that dominates the crowd, no one wants to disappear as soon as they get on the field and just emerge, but the fact is very cruel, in this game of eating chicken in the price increase, only the strong can become the ultimate survivors.