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Since the beginning of this year, benefiting from the hot new energy track, the lithium battery sector has ushered in an outbreak period. It is particularly worth mentioning that the concept index of lithium iron phosphate batteries has continued to rise. From the beginning of this year to December 10, the concept index of Wind lithium iron phosphate batteries has increased by as much as 85.17%, while the Shanghai and Shenzhen 300 index has fallen by 3% over the same period. The hot battery concept is accompanied by a high boom in the lithium iron phosphate industry.
SMM historical price data show that as of December 10, the price of lithium iron phosphate (power type) is 92,000 yuan/ton, and the price of lithium iron phosphate (energy storage type) is 86,500 yuan/ton. Since the beginning of this year, the price of battery-grade lithium carbonate has risen sharply. Driven by costs, the price of power-type lithium iron phosphate has also risen rapidly. The average price has risen from 39,000 yuan/ton in January to about 93,000 yuan/ton in the near future, an increase of up to 138%. In fact, since the beginning of this year, a number of listed companies have actively increased the layout of lithium iron phosphate business, intensive expansion of lithium iron phosphate production capacity. According to incomplete statistics, the planned annual production capacity of lithium iron phosphate projects announced by listed companies in October alone exceeded 1 million tons. As a positive electrode material, lithium iron phosphate and ternary material, which is better or worse? Who will become the industry trend? The total output of the top 10 enterprises in 2020 accounted for 99% of the output of lithium iron phosphate materials in China in 2020. With the expansion of production and the increase of market participants, can the current monopoly pattern of head enterprises be broken?
01 Strong market demand
Lithium iron phosphate is a cathode material with lithium source, iron source, phosphorus source and carbon source as the main raw materials, and the cathode material is the core material of lithium battery, accounting for 30%-40% in the cost of lithium battery materials, which directly determines the overall cost of the battery. It is the largest material with the highest output value in the lithium battery industry chain, leading the development of the entire lithium battery industry. Specifically, the lithium battery industry chain is mainly divided into three parts: the front end is non-ferrous metals, fluoride and other resources; the middle is positive and negative materials, electrolyte, copper foil, diaphragm, lithium battery equipment and other materials; the back end is the battery manufacturer represented by the Ningde era.
At the time of the high business climate of the lithium battery industry in 2021, the profit growth of the front end of the industrial chain is even greater, and resource enterprises and raw material suppliers are the biggest beneficiaries. Lithium batteries are the core components of new energy vehicles, and their development is closely related to the new energy vehicle industry. The “New Energy Vehicle Industry Development Plan (2021-2035)” proposes that by 2025, my country’s new energy vehicle sales will reach about 20% of the total sales of new vehicles.
According to the forecast of the Institute of Lithium Electric Research, China’s new energy vehicle production and sales will reach 6.25 million and 6.23 million vehicles respectively by 2025, and the average annual compound growth rate of production and sales will be about 35% for the base period of 202020.
Driven by policy, China’s new energy vehicles have developed rapidly this year. According to the passenger car production and sales data released by the Passenger Car Association, from January to November this year, 2.807 million new energy passenger cars were wholesale, a year-on-year increase of 190.2%; retail sales of 2.514 million vehicles, a year-on-year increase of 178.3%; the penetration rate was 13.9%, compared with the 2020 annual 5.8% The penetration rate has increased significantly.
With the rapid rise of the new energy vehicle market, the demand for power battery industry in China is growing. According to the statistics of the Institute of Lithium Electric Research, the compound growth rate of power battery installed capacity in China from 2017 to 2019 was 31.29%, which was the main driving force of global power battery growth. In 2020, the global power battery installed capacity 137.3GWh, a year-on-year increase of 17.2%, of which China’s power battery installed capacity of 63.60GWh, accounting for 46.32%. From January to October this year, China’s power battery installed capacity 107.5GWh, up 168.1% year-on-year. Lithium iron phosphate and ternary materials are the two most widely used materials in new energy vehicle power batteries. In terms of performance, the two have their own advantages and disadvantages.
Specifically, lithium iron phosphate has the advantages of high safety, low cost, and long cycle life. It also has the defects of low energy density and poor low temperature performance. At present, many enterprises in the industry are studying to improve their energy density by improving the technical route or process flow. The ternary material has the defects of high cost, short cycle life and poor safety, and has more advantages in energy density and low temperature performance.
Since 2008, lithium iron phosphate batteries have occupied the mainstream position in China’s new energy vehicle power battery market by virtue of their low-cost advantages, and lithium iron phosphate shipments have also been in a trend of rapid growth, with shipments of 14,000 tons in 2014, up 68% from the same period last year. Shipments in 2015 were 31,000 tons, up 118% from the same period last year. Since 2020, Ningde era and BYD have respectively introduced technologies such as “CTP” and “blade battery”, which has improved the energy density of lithium iron phosphate batteries, and the advantages of safety and cost have become more prominent, which has promoted their application in the field of new energy passenger cars.
In addition, “Model3”, “BYD Han”, “Hongguang MINI” and other explosive models have also begun to use lithium iron phosphate batteries. With the technical route of lithium iron phosphate gradually gaining popularity in the end consumer market, the lithium iron phosphate battery market is gradually expanding. According to the Starting Point Institute, the global lithium iron phosphate battery market was 51.3GWH in 2020, up 46.5% from the same period in 2019. Demand for lithium iron phosphate batteries has further increased, and production and sales have also grown rapidly. According to data from the China Automotive Power Battery Industry Innovation Alliance, in the first half of 2021, the output of lithium iron phosphate batteries was 37.7GWh, accounting for the 53.4% of the total output of power batteries; the sales volume was 30.8GWh, accounting for the 52.9% of the total sales volume of power batteries, surpassing the production and sales volume of ternary batteries.
Accordingly, the installed capacity of lithium iron phosphate batteries has benefited from the rapid growth of strong demand from downstream customers. Data show that from January to November 2021, China’s power battery loading volume 128.3GWh, up 153.1% from the same period of last year. Among them, the installed volume of lithium iron phosphate battery reached 64.8GWh, accounting for 50.5%, up 270.3% from the same period of last year. The total loading volume of ternary batteries 63.3GWh, accounting for 49.3% of the total loading volume, up 92.5% from the same period of last year.
Listed companies actively expand production
With the rapid growth of the demand for lithium iron phosphate batteries in China, the market space of lithium iron phosphate is broad, and it is expected to usher in huge development opportunities. The volume price of lithium phosphate industry has risen, and the business climate has increased significantly. The price of lithium iron phosphate has continued to rise this year. SMM historical prices show that the spot price of power lithium iron phosphate rose from the average price of 39,000 yuan/ton in January to about 93,000 yuan/ton in the near future, an increase of 138%. UFO POWER believes that the iron lithium supply gap is still in the fourth quarter, the overall imbalance between supply and demand of lithium iron phosphate continues, will still support the price of lithium iron phosphate, it is expected that the price of lithium iron phosphate will continue to rise with the price of raw materials.