Lithium iron phosphate depth report in the chemical industry: commoditization, competition for deer, integration cost is king

　　1. The supply and demand of lithium iron phosphate has grown rapidly, and it is developing in the direction of commoditization

　　1) Rapid growth in supply and demand of lithium iron phosphate: In 2020, China's lithium iron phosphate production capacity was 347,000 tons, the output was 133,100 tons, the import volume was 0.03 million tons, and the apparent consumption was 132,800 tons, an increase of 35.2% year-on-year. From January to August 2021, China's lithium iron phosphate output was 219,700 tons, imports were 0.1 million tons, and apparent consumption was 220,100 tons, an increase of 254.12% year-on-year. In September 2021, the domestic power battery production continued to increase, lithium iron phosphate battery production of 13.5GWh, +252.0% year-on-year, +21.9% month-on-month, and the proportion of production continued to increase to 58.3% after exceeding three yuan for the first time in May. Lithium iron phosphate battery loading capacity of 9.5GWh, +32.3% month-on-month, accounting for 60.8%, an increase of 3.3 percentage points month-on-month. Benefiting from the rapid development of new energy vehicle production and sales, increased penetration rate, the proportion of lithium iron phosphate power batteries increased, superimposed on its future development in the field of energy storage can be expected, if the promotion is smooth, we expect that the global demand for lithium iron phosphate in 2025 is expected to increase from 136,000 tons in 2020 to 2.724 million tons in 2025, with a GAGR of up to 82%. In addition to the expansion of traditional lithium iron phosphate enterprises, phosphorus chemical, titanium dioxide and other production enterprises have successively cut into the iron phosphate / lithium iron phosphate industry chain with their respective resource advantages, and developed the second growth curve.

　　2) Lithium iron phosphate bulk commercialization: Lithium iron phosphate production process includes solid phase method, liquid phase method, different process routes product quality difference is not large, product unit consumption and product price is similar. In summary, based on the tradable, homogeneous and standardized characteristics of lithium iron phosphate products, production and sales are expected to grow rapidly, and are widely used as raw materials for new energy vehicles, energy storage and other fields, and we believe that it is developing in the direction of bulk commercialization.

　　3) For lithium iron phosphate, we construct an elemental analysis method, value and quantity, lithium source> phosphorus source> iron source > carbon source.

　　2, there is "lithium" all over the world, lithium carbonate has become the profit king of lithium iron phosphate industry chain

　　1) Lithium carbonate is in short supply: 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%.

　　2) Lithium carbonate prices continue to rise: the price of lithium iron phosphate at the beginning of 2021 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.

　　3) Lithium carbonate is profitable: We estimate that the gross profit of lithium carbonate rose from 10,700/ton in early 2021 to 116,000/ton in mid-October 2021. 0.22-0.24 tons of lithium carbonate is required to produce 1 ton of lithium iron phosphate. Lithium carbonate is the largest single raw material cost in the production of lithium iron phosphate materials.

　　3. Phosphorus and iron resources are indispensable, and the cost of integration is king

　　1) Titanium dioxide enterprises have the advantage of iron resources: 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.

　　2) Phosphorus chemical enterprises have the advantage of phosphorus resources: for the industrial chain of "phosphate rock - high-purity phosphoric acid / industrial monoammonium phosphate - iron phosphate", lithium iron phosphate has greatly improved the added value of phosphorus resources. In the short and medium term, the company's existing high-purity phosphoric acid, industrial grade monoammonium phosphate production capacity resources and related technical reserves have a first-mover advantage, and the long-term phosphate ore resources are also very important. According to the average price of the 21H1 market, if we purchase 85% high-purity phosphoric acid as a phosphorus source, the cost of phosphorus sources per ton of lithium iron phosphate is about 4124 yuan, while for phosphate resource enterprises using wet purification technology to produce phosphoric acid, the cost of phosphorus sources per ton of lithium iron phosphate is about 1989 yuan / ton, and the self-supplied phosphorus source of lithium iron phosphate enterprises has a cost advantage of about 2135 yuan / ton. For the production of lithium iron phosphate, phosphorus-derived phosphorus chemical enterprises have a greater cost advantage than titanium dioxide enterprises derived from iron-derived giving.

　　3) The thermal phosphoric acid process has the disadvantages of high energy consumption, large pollution and high cost. Wet phosphoric acid process low energy consumption, small pollution is the development direction, but the product impurities are more, need to be further purified, wet phosphoric acid purification process is the technical barrier of phosphorus chemical enterprises.

　　4) The production of 1 ton of lithium iron phosphate requires 2.26 tons of phosphate ore (30% abundance considerations), under the background of environmental protection and energy dual control, the output of phosphate ore is decreasing year by year, and enterprises with rich phosphate ore resources are dominant.

　　5) Cut into the iron phosphate / lithium iron phosphate industry titanium dioxide and phosphorus chemical enterprises are numerous, the group of deer, with the development of iron phosphate / lithium iron phosphate towards the direction of bulk commercialization, the cost of integration is king. In addition to cost factors, due to the high concentration of battery manufacturers in China, it is crucial to bind downstream battery large customers.

　　4. It is recommended to pay attention

　　From the perspective of the value of the industrial chain, if the valuation is not considered, the order of attention is lithium source> phosphorus source> iron source> carbon source. Lithium source, phosphorus source, iron source company is mainly as follows:

　　1) Lithium source company: Salt Lake Shares, Tianqi Lithium, Ganfeng Lithium, etc.

　　2) Iron Source Company: CNNC Titanium Dioxide, Longbai Group, Ananda, Lubei Chemical, etc.

　　3) Phosphorus source company: Chuanfa Longmon, Yuntu Holdings, Chuanheng Shares, Xinyangfeng, Hubei Yihua, Sylter, Chuanjinnuo, Yuntianhua, Xingfa Group, etc.

　　Risk warning: project progress and profitability are less than expected, competition is aggravated, product price fluctuations, policy uncertainty, liquidity tightening risks, etc.

　　Investments are risky and decisions must be made with caution. This article does not constitute investment recommendation, please judge the risks yourself.