Why is lithium iron phosphate so popular?
According to the latest data from the China Automobile Association, in October, China's power battery loading volume was 5.9GWh, up 44.0% year-on-year, down 10.8% month-on-month, and continued to maintain a growth trend year-on-year. Among them, ternary lithium batteries loaded a total of 3.4GWh, up 15.7% year-on-year, down 19.1% month-on-month; lithium iron phosphate batteries loaded a total of 2.4GWh, up 127.5% year-on-year, up 3.5% month-on-month, and have achieved a year-on-year increase of more than 100% for three consecutive months. From the data point of view, the increase in the loading volume of lithium iron phosphate batteries is much higher than that of ternary lithium batteries.
The industry believes that the continuous outbreak of lithium iron phosphate batteries is inseparable from the hot sales of explosive models led by BYDHan EV and Wuling Hongguang Mini. At the same time, in October, the domestic Model 3 announced that it would be equipped with a lower-cost lithium iron phosphate battery produced by the Cataline era. The price of the Model 3 standard endurance upgrade version dropped from 271,000 yuan to 249,000 yuan that month, becoming the fourth largest sales volume in the new energy passenger car market in October.
What is the charm of lithium iron phosphate that makes a group of new energy vehicles abandon ternary batteries and choose it? It all starts with the production of lithium iron phosphate.
<h2>Lithium iron phosphate is developing in the direction of commoditization</h2>
The preparation process of lithium iron phosphate is mainly based on solid phase method, which is characterized by simple operation, low technical barriers and low cost. At present, only German nano adopts liquid phase process, raw materials in the liquid phase to achieve molecular-level mixing, self-heating evaporation of water to obtain nano-scale precursor gel, through crushing and sintering and other links, to obtain nano-scale lithium iron phosphate.
Liu Qiang, chief of Soochow Securities Chemical, believes that the products obtained by different processes and preparation methods have similar performance, homogenization, standardization, no obvious systemic differences, and the price is comparable, which is one of the important necessary conditions for constituting bulk commodities, and the preparation of lithium iron phosphate has this characteristic.
At the same time, in the context of "carbon neutrality", the new energy automobile industry is entering a new stage of accelerated development, and China's State Council plans to reach about 20% of the total sales volume of new energy vehicles by 2025. According to soochow securities statistics, domestic new energy vehicle sales reached 2.142 million units from January to September 2021, an increase of 199.9% year-on-year.
It is also with the development of new energy vehicles that the cost advantage of lithium iron phosphate is more prominent.
Ternary lithium batteries that have dominated the market for many years have high energy density and good low temperature performance, but they are really expensive. The most common ternary material nickel cobalt manganese, of which cobalt metal raw materials have limited global reserves, concentrated in the Democratic Republic of the Congo, but the mining rights are controlled by European and American companies, and the purchase price is not stable.
Phosphorus and iron are rich in domestic resources of raw materials, to the Cost Statistics of the China Battery Alliance this year, the cost of ternary lithium is about 800 yuan / kWh, and lithium iron phosphate is stable at around 650 yuan / kWh.
Liu Qiang analyzed that in the field of power batteries, from 2018 to 2020, the annual output of domestic ternary batteries has been higher than that of lithium iron phosphate batteries. In 2021, the production of ternary batteries from January to April was higher than that of lithium iron phosphate; in May and June, it was overtaken by lithium iron phosphate. In May, the production of lithium iron phosphate power batteries was 8.7 Gwh, which was 1.75 times the production of ternary batteries.
Due to the slight delay in battery loading compared with production, the loading volume of ternary batteries in June is still ahead of lithium iron phosphate batteries, and the total load of ternary batteries in the first half of 2021 is 30.2Gwh, higher than the lithium iron phosphate batteries 22.2Gwh. Entering the second half of the year, the loading volume of lithium iron phosphate also exceeded the ternary battery, and the gap gradually expanded, and the installed capacity of lithium iron phosphate power battery in September 2021 was 9.54Gwh, which was 3.40Gwh higher than that of ternary batteries.
According to Liu Qiang's statistics, as of September 2021, the domestic lithium iron phosphate production capacity has reached 418,000 tons. It is expected that before 2022, the supply and demand of lithium iron phosphate will be tightly balanced, and the tight supply situation will be alleviated in 2023, and competition will intensify, which is expected to be exported to the world like the photovoltaic industry chain. He believes that with the release of production capacity, the supply of lithium iron phosphate in China will be sufficient in the future, and both the supply and demand ends will show rapid growth, and it will develop in the direction of bulk commercialization.
<h2>Lithium iron phosphate industry chain investment</h2>
The explosion of lithium iron phosphate has driven the common profit of the upstream and downstream industrial chains. Among them, lithium carbonate, as the largest single raw material cost in the production of lithium iron phosphate materials, has become the biggest beneficiary.
According to the statistics of Soochow Securities, in terms of supply and demand, in 2020, China's lithium carbonate production capacity is 414,900 tons, the output is 172,100 tons, the import is 50,100 tons, the apparent consumption is 214,700 tons, +14.2% year-on-year, and the external dependence is 23.3%. From January to August 2021, the output was 151,100 tons, the import was 55,600 tons, the apparent consumption was 200,900 tons, +63.36% year-on-year, and the external dependence was 27.7%. In August 2021, the monthly import was 0.83 million tons, the apparent consumption was 29,400 tons, and the external dependence was 28.2%.
At the same time, the price of lithium carbonate continues to rise. At the beginning of 2021, the price of lithium iron phosphate was 37,000 yuan / ton, and it was reported at 85,000 yuan / ton on October 15, 2021, up 130% from the beginning of the year; the average price this year was 51,800 yuan / ton. At the beginning of 2021, the price of battery-grade lithium carbonate was 53,800 yuan / ton, and on October 15, 2021, it was 193,400 yuan / ton, up 259% from the beginning of the year, an increase higher than lithium iron phosphate; the average price this year was 97,900 yuan / ton.
In addition to lithium carbonate, phosphorus and iron resources are also indispensable. Liu Qiang analyzed that titanium dioxide enterprises have the advantage of iron resources, and the sulfuric acid method produces 1 ton of titanium dioxide by-product of 3.5-4 tons of ferrous sulfate. Through resource reuse, the production cost of a single ton of lithium iron phosphate can be saved by about 1676 yuan; while the phosphorus chemical enterprise has the advantage of phosphorus resources, using wet purification technology to produce phosphoric acid, the phosphorus source cost of a single ton of lithium iron phosphate is about 1989 yuan / ton, which is 2135 yuan / ton lower than the market price.
However, Liu Qiang, chief of Soochow Securities Chemical, also said that there are many titanium dioxide and phosphorus chemical enterprises in China that cut into the iron phosphate and lithium iron phosphate industries, and with the development of iron phosphate and lithium iron phosphate in the direction of bulk commercialization, the cost of integration is king. In addition to the cost factor, due to the high concentration of battery manufacturers in China, it is crucial to bind downstream battery large customers.
Source of this article: Liu Qiang of Soochow Securities, original title: "Commoditization, Crowds of Deer, Integration Cost is King"
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