Author / Starch sausage under the stars
Edit/Spinach's Starry Sky
Typesetting/Beef jerky under the stars
Zirconium is a rare small metal with high strength and high corrosion resistance. It is also widely used in aerospace, nuclear industry, chemical industry and other fields because of its characteristics. With the continuous development of science and technology and industry, the application field of zirconium has gradually expanded, and the quality and performance requirements of zirconium have become higher and higher for industrial upgrading. In recent days, zirconium companies have also gained daily limits because of their application in solid-state battery electrolytes.
Oriental Zirconium Industry Daily Limit Source: Straight Flush
The direction of capital markets is not always in sync with commodity markets. Zirconium metal market this time is also the same. Against the backdrop of continuous gains in the capital market, the performance of the commodity market is not optimistic. On the one hand, the profitability of the zirconium industry is not optimistic, and on the other hand, the new concept leading the rally is only in the experimental stage. Therefore, while enjoying the dividends of the capital market, zirconium companies must also make more efforts in the commodity market.
First, the resource endowment is poor, and the added value of products is low
Zirconium is relatively scarce in the mainland and mainly relies on imports, and the mainland is the world's largest importer of zirconium resources. According to statistics, the global zirconium ore resource reserves in 2022 are about 68 million tons (in terms of ZrO2). Among them, Australia ranks first in the world with reserves of about 48 million tons, accounting for 70.6% of global reserves. The continent's reserves are only 500,000 tons, accounting for 0.7% of global reserves and 1% of Australia's.
Zirconium production and reserves in China Source: Changjiang Securities Research Institute
Although China lacks zirconium ore resources, zirconium production ranks among the top in the world. However, the industry threshold for zirconium metal is high, so although the mainland wins in the production of zirconium metal, most of the zirconium metal products have low added value.
Based on the performance of their own products in the market, domestic enterprises have gradually realized that the ceiling of the current model is limited, and they are constantly increasing R&D investment to promote the development of the industry to high-value areas. The main listed companies in the industry, Oriental Zirconium (002167) and Sanxiang New Materials (603663) have been increasing their investment in R&D expenses year by year, even in the downturn in the market environment revenue and profits have been impacted, but the growth of R&D expenses also shows the company's determination to enter the high-end market.
Second, clean energy hotspots
The main focus of zirconium enterprises lies in two aspects, one is nuclear-grade sponge zirconium, and the other is the application of zirconium in the field of batteries. Although zirconium still accounts for the majority of traditional applications such as ceramics, the current global prosperity in the field of nuclear power and new energy continues to rise, becoming an important force driving the demand for zirconium. According to CITIC Securities, the proportion of clean energy demand for zirconium is expected to reach 5%/20% by 2025/2030. Zirconium-based materials and nuclear-grade zirconium materials for solid-state batteries have also become the main leading concepts in the current market. However, due to the long-term technological blockade by foreign countries, the mainland has a natural weakness in the field of nuclear-grade zirconium, and is currently in the stage of continuously promoting the realization of the goal of independent industrialization.
Solid-state battery news Source: Straight Flush
As the core of solid-state batteries, there are three mainstream technical paths for solid-state electrolytes: , and. If oxide solid electrolytes such as lithium lanthanum zirconium oxide (LLZO) and lithium lanthanum zirconium titanium oxide (LLZTO) are used, there is a certain demand for zirconium dioxide. In addition, zirconium is also used in fuel cells, such as SOFC (solid oxide fuel cell), which is a third-generation fuel cell, and its electrolyte is stabilized zirconia.
In order to keep track of the hot technology route in the market, Dongfang Zirconium has established a special technical research and development team to continue to increase the technology research and development and investment of zirconium dioxide products used in solid-state battery electrolytes, in order to seek to establish a first-mover advantage in product technology and achieve high-quality growth of the company's business.
However, zirconium is only one of the technical paths in solid-state battery electrolytes, and the application of zirconium is currently only in the research and development stage. For example, Dongfang Zirconium said that it is still in the stage of providing samples for some solid-state battery material manufacturers to develop. Sanxiang New Materials also said that the zirconium-based materials for solid-state batteries are still in the stage of product sample testing and optimization, and have not yet formed large-scale sales, and the business income in this field accounts for a small proportion of the company's main revenue, which is expected to account for less than 1%, which has a limited impact on the company's short-term performance.
3. The commodity market that is lagging behind
The booming concept of clean energy has indeed led to the rise of the zirconium sector, but it does not seem to have a positive impact on the commodity market. On the one hand, the prices of zirconium raw materials and zirconium products are still declining, and there is no upward trend driven by the new concept. The sluggish price indicates that the current spot market is still weak in demand and is not being pulled by the new concept.
Zirconium price trend Source: Guojin Securities Research Institute
On the other hand, the gross profit margin performance of domestic enterprises' zirconium products is not optimistic. For example, the gross profit margin of the main products of Oriental Zirconium has been declining in recent years. In the product structure of Oriental Zirconium, it accounts for about 80%, but its gross profit margin is indeed lagging behind. This also confirms from the performance of enterprises that the mainland zirconium industry is still in the stage of urgent development.
Gross profit margin of Oriental Zirconium's main products Source: Straight Flush
If the positive impact of commodity markets is not realized, then the rise in stock prices in capital markets will only be a bubble. Therefore, zirconium companies cannot rely on the concept to enjoy the success, but also to make more efforts in technology research and development and industry development.
Note: This article does not constitute any investment advice. The stock market is risky, and you need to be cautious when entering the market. There is no harm in buying and selling.