The friction in the lithium battery industry is slowing down
- Price differentiation of upstream materials for lithium batteries
- The downstream demand of lithium battery
- Lithium battery competition and gross profit margin
Since last year, the price of lithium battery materials represented by lithium carbonate has continued to rise, which has intensified the game between the upstream and downstream of the lithium battery industry chain. Also, the lithium carbonate factories are competing. What are the most competitve factories? We can read the top 5 lithium carbonate factories in China article to see.
In the second quarter, the upstream and downstream of the lithium battery industry chain has completed a new round of competition. The price of upstream materials has been differentiated, the price of lithium carbonate has stabilized at a high level, and the comprehensive cost of lithium battery has been high, but the terminal demand is strong, showing strong cost resilience.
The development of lithium industry guadually slows down and the gross profit margin slowly recovered. The friction in the lithium battery industry has also slowed down and entered a new equilibrium state.
1. Price differentiation of upstream materials for lithium batteries
After the price of lithium carbonate rose sharply at the end of last year, it has remained at a high level of about 490,000 RMB/ton since the beginning of March, and the price of lithium iron phosphate cathode material has remained at a high level of about 160,000 RMB/ton for more than 4 months.
The price of ternary cathode materials reached more than 360,000 RMB / ton in mid-April, but with the decline in the price of nickel, cobalt, manganese and other resources, it has now dropped to about 320,000 RMB / ton, a drop of about 10%, but still far Higher than the level of 160,000 RMB / ton in the same period last year.
As for the electrolyte, due to the release of production capacity and the sufficient supply of raw materials, the price has dropped by a large margin, which has dropped by 38% compared with the beginning of this year and about 7% compared with the same period last year. The prices of negative electrodes, separators and copper foils have remained stable since the beginning of this year after a slight increase last year.
With the release of effective production capacity and the relief of graphitization pressure, the price of negative electrode materials is expected to loosen, but the supply of diaphragms and copper foils will continue to be in short supply in the next 2-3 years due to the production cycle of 24 months and 36 months respectively. In the context of the rapid development of the lithium battery industry, the price adjustment caused by the partial production capacity imbalance is gradually reflected.
In general, the current upstream materials have changed from overall tension to local tension, and there is differentiation, lithium carbonate and lithium iron phosphate remain high, ternary materials have declined, electrolyte prices have dropped significantly, negative electrodes and diaphragms have remained stable in the short term. Costs are still higher.
2. The downstream demand of lithium battery
The downstream price affordability of lithium batteries stems from the strong demand growth in recent years, and power and energy storage also jointly undertake upstream cost pressures. In terms of power batteries: In the first half of this year, the sales of new energy vehicles in China increased by 120% year-on-year, and the installed capacity of power batteries increased by 110% year-on-year. Electric vehicle brands such as Tesla, Xiaopeng, and Ideal have been raising prices.
In the first quarter of this year, China’s photovoltaic installed capacity increased by 138% year-on-year, and the demand for energy storage facilities has increased significantly. The bidding price of energy storage systems dominated by lithium iron phosphate batteries is also increasing and other countries’ energy crisis expectations are stimulating households. The demand for energy storage has surged, and the supply of products is in short supply.
In addition, different demand intensity is also an important reason for the differentiation of upstream materials. At present, ternary batteries are mainly used in mid-to-high-end passenger cars and some power tools, while lithium iron phosphate batteries cover large-scale energy storage, home energy storage, construction machinery, two-wheelers and mid-to-low-end electric passenger vehicles, especially storage.
The energy market is large and the demand is growing rapidly, which also explains why the price performance of lithium iron phosphate is better than that of ternary batteries from the demand side. Nowadays, strong demand has become the key to supporting the development of the industry, and it is also the reason for the chaos in the price of the industry chain.
3. Lithium battery competition and gross profit margin
At present, the downstream demand is strong, and the upstream resources have changed from overall tension to partial tension. For this reason, the bargaining power of the midstream lithium battery link has rebounded. For this reason, the friction between the lithium battery link and the upstream and downstream is also being alleviated, and the interference from upstream resources is also weakening.
In fact, some lithium battery factories are currently pegging the price of lithium carbonate when pricing with downstream customers, transferring key price disturbance factors to downstream customers.
In this context, the midstream lithium battery segment is constantly seeking the best and reasonable gross profit margin range to get rid of cost and market factors. However, with the rising price of lithium carbonate and the homogeneous expansion of lithium battery production capacity, it is difficult to have excess profits at present. Lithium battery factories can only seek reasonable gross profit margins that are in line with their own competitiveness.
Lithium battery factories that have emerged from the industry chain game dilemma can spend more energy on building their core competitiveness, including technological innovation, product iteration and customer optimization, etc. The factors affecting gross profit margins will also return to core competition from simple material cost factors force.
In the future, although it is difficult for lithium battery factories to obtain excess profits as a whole, and the overall gross profit margin will remain at a low and reasonable level, the leading lithium battery factories can still enjoy relatively higher gross profit margin levels through stronger core competitiveness, or staged excess profit of technological innovation.
In the past year, the lithium battery segment was limited by the cost of upstream materials, and the gross profit margin was once suppressed. However, under the support of strong downstream demand, the gross profit margin gradually reversed. While in the context of the tight supply of lithium carbonate and the homogeneous expansion of lithium battery production capacity, it is still difficult for the lithium battery sector to obtain excess profits in the short term.
The friction in the industry chain that started with the material cost surge has slowed down, and the material cost has begun to differentiate. The gross profit margin of the lithium battery segment is expected to get out of the material cost constraints and return to the core competitiveness of technological innovation, product iteration and customer structure, thus forming a benign value guide.
By now, the lithium industry is entering a new state of development. The downstream demand of lithium industry is strong, and the upstream costs can be afforded. The upstream materials dynamically harvest the downstream depending on the local supply and demand situation, while the overall gross profit margin of the midstream lithium battery segment tends to be low and reasonable.
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