After large-scale expansion, will lithium iron phosphate have overcapacity? According to the statistics of the reporter of securities times · e company, the production expansion scale claimed by various manufacturers and the existing production capacity have reached 5 million tons, significantly exceeding the downstream demand in 2025. According to the normal production expansion cycle, the surplus will appear next year, but limited to energy consumption indicators, lithium resource shortage and other factors, this time point may be postponed.
Competitors entering the site are not blind to risks. Some production expansion announcements are suspected of “rubbing hot spots”, and there is uncertainty about the implementation of production capacity in the later stage. Traditional manufacturers and cross-border players have their own strengths. When the centralized release of production capacity brings reshuffle, manufacturers lacking process technology and cost control ability will take the lead.
Competition is not only among producers, but lithium iron phosphate itself is also being hunted by a variety of materials. With the rising price, the cost performance advantage of lithium iron phosphate is gradually weakened, and the energy density is approaching the ceiling. Sodium ion batteries, lithium manganate and other alternatives are “eyeing”, and an endless stream of new technology routes are about to launch a market competition.
huge capacity of 5 million tons hit
“If the manufacturers of lithium iron phosphate blindly increase the quantity, the peak will fall when they are put into production in the future.” Li Jigang, general manager of Tianjin skland Technology Co., Ltd., sighed to reporters after working in the phosphate field for 20 years and seeing several cycles of ups and downs.
Over the past year, announcements of production expansion have been made one after another in the lithium iron phosphate industry. Not only Shenzhen Dynanonic Co.Ltd(300769) , Hunan Yuneng and other established manufacturers participated in the competition, but also cross-border players such as Lb Group Co.Ltd(002601) , Cnnc Hua Yuan Titanium Dioxide Co.Ltd(002145) , Hubei Xingfa Chemicals Group Co.Ltd(600141) from titanium dioxide and phosphorus chemical industry. Production expansion projects are often measured at 100000 tons. At the same time, the hidden worry of overcapacity has gradually spread.
The reporter combed the recent expansion of lithium iron phosphate production. There are nearly 40 large and small projects, with a total expansion scale of 4.9 million tons. This scale has been equivalent to ten times of China’s lithium iron phosphate shipment of 470000 tons in 2021. If all of them are implemented and the existing capacity is added, there will be a huge capacity of more than 5 million tons at that time. This is only incomplete statistics, and the actual planning may be more.
Can 5 million tons of lithium iron phosphate be digested? The key depends on the growth space of power battery and energy storage markets.
According to the prediction of Gaogong lithium battery, the global penetration rate of new energy vehicles will reach more than 25% in 2025, which will drive the global shipment of power batteries to exceed 1100gwh The inflection point of the energy storage market will also accelerate, and the global shipment of energy storage batteries is expected to reach 416gwh Coupled with the demand for light vehicles, low-speed vehicles, heavy trucks, ships and other scenarios, the total global demand is expected to reach 1800gwh in 2025
Based on the experience of many people in the industry, 1GWh battery needs to consume 25000 tons of lithium iron phosphate. Based on this, it is estimated that the demand for lithium iron phosphate corresponding to 1800gwh is 4.5 million tons. The above capacity planning has exceeded this figure. It should be noted that not all batteries will adopt the lithium iron phosphate line. After a year of counter attack on production and sales, lithium iron batteries just shared the same share with ternary batteries last year. This means that the demand of 4.5 million tons is extremely optimistic, while overcapacity is a high probability event.
“The transmission of supply chain information is asymmetric, which creates a false prosperity of lithium iron phosphate Market to some extent.” Li Liang, deputy general manager of Gaogao (Shenzhen) Technology Co., Ltd., told reporters that the strong terminal demand led to overly optimistic market sentiment. Facing the huge market cake, enterprises in the industry want to seize the market position with the advantage of scale and eliminate the marginal cost. In fact, after setting sales and installation targets, car enterprises, energy storage and other customers will generally seek multiple suppliers, and the expansion of upstream suppliers will match their needs according to the upper limit, which will virtually enlarge the actual demand and mislead the blind expansion of upstream suppliers.
This round of production expansion surged from the second half of 2020, when the Shanxi Guoxin Energy Corporation Limited(600617) automobile market was heating up. The sudden burst of demand in the downstream goes back layer by layer along the “vehicle battery factory Material Factory resource end”, which caught the suppliers unprepared. The price of lithium iron phosphate soared, from less than 40000 yuan / ton at the beginning of 2021 to more than 140000 yuan / ton today, an increase of 250%. The profits of manufacturers also increased with the naked eye. The gross profit margins of Shenzhen Dynanonic Co.Ltd(300769) and Hunan Yuneng, the top two in the industry, in the first three quarters of 2021 were 22.47% and 24.75% respectively, much higher than 10.18% and 16.18% of the previous year.
Just before 2020, the lithium iron phosphate industry had just experienced a trough, the marketization of medium Shanxi Guoxin Energy Corporation Limited(600617) vehicles was not yet mature, and the subsidy policy focused on high energy density and long endurance mileage. Therefore, the market preferred ternary batteries, and lithium iron phosphate manufacturers who completed a round of capacity expansion were hit. Li Jigang recalled that in recent ten years, when the capacity utilization rate of lithium iron phosphate was the lowest, it was only 20%, and the lowest price was 28000 yuan / ton, with a gross profit of about 1000 yuan per ton.
The production expansion cycle of lithium iron phosphate is not long, and the industry believes that it is generally 6-12 months. “In terms of last year’s shipments, some new production capacity has been put into operation. Starting from the end of 2020, we should have the production capacity by the end of last year. If it is carried out smoothly, there will be excess risk as soon as the second half of this year.” Li Jigang said.
industry expansion progress is slower than expected
From the perspective of planning figures alone, overcapacity has become the “grey rhinoceros” in the lithium iron phosphate industry, but when it will come needs to be judged by closely following the progress of capacity implementation.
Lb Group Co.Ltd(002601) is the leader in the cross-border players of lithium-ion battery materials. The company disclosed the announcement on the completion and trial production of phase I lithium iron phosphate with an annual output of 200000 tons on February 15. The reporter visited the production base in Qinyang City. The project covers a total area of more than 1000 mu. After transformation on the original basis, four large plants have the ability to produce 100000 tons of lithium iron phosphate per year. At present, two buildings are basically equipped with equipment. The core equipment of the production line is eight 80 meter long kiln systems, corresponding to the capacity of 50000 tons of lithium iron phosphate in phase I.
The person in charge of the workshop said that the production line completed its first feeding on the eve of new year last year. At present, 50000 tons of phase I is in trial production, and will be officially put into operation after inspection and commissioning at the end of this month, “The project is expected to be up to standard and put into operation in March this year and reach full production in the second half of this year. Now it is docking and sending samples with downstream customers. The customer verification cycle is about 3-6 months, most of which are power battery manufacturers.”
The reporter also learned that the iron phosphate project in Jiaozuo City is close to the titanium dioxide production line of Lb Group Co.Ltd(002601) , which can easily use hydrogen peroxide, sodium hydroxide, ferrous sulfate and other by-products as raw materials.
More lithium iron phosphate expansion projects are slower than expected. The reporter found that most of the expansion projects are still in the preliminary planning and approval stage, and even some projects have only signed a framework agreement with their partners without actual progress.
For example, Cnnc Hua Yuan Titanium Dioxide Co.Ltd(002145) plans a 500000 ton lithium iron phosphate project, which is ahead of the scale in the industry. According to the announcement plan, it was originally planned to start construction in the third quarter of 2021 and put into operation as soon as the second half of this year.
However, the reporter called the company and learned that the project has not yet started, mainly because of the slow progress in environmental assessment and obtaining energy consumption indicators. It is expected to build a capacity of 100000 tons of lithium iron phosphate by the end of 2023.
Phosphate fertilizer manufacturer Anhui Sierte Fertilizer Industry Ltd.Company(002538) announced 100000 tons of iron phosphate and 50000 tons of lithium iron phosphate projects in September last year, and the company responded to reporters that the project has not been officially selected and there is no corresponding land, and the project is still in the early stage of equity transfer.
“Some friends in the industry often reflect that the production expansion plan has been done very much, but the local government will not approve such a large energy consumption index. This item is stuck, so the production capacity launch progress will be lower than expected.” A person from the phosphorus chemical industry told reporters that the power consumption of producing a ton of iron phosphate (one of the main raw materials of lithium iron phosphate) is about 1500 degrees, and the power consumption of a ton of lithium iron phosphate is up to 6000 degrees. Whether we can get the energy consumption index is very important to start the construction.
A senior person of the letter Phi told reporters that according to the regulations, as long as the two sides cooperate to sign an agreement, listed companies need to fulfill the letter Phi obligations. At this time, the land may not be implemented, and the prior approval of environmental impact assessment and energy rating has not been done. As for when the construction can start, it belongs to the follow-up progress, in which there is still great uncertainty.
Even if the production line is completed, lithium resources are likely to become the bottleneck of production. The production of lithium iron phosphate mainly involves three resources: lithium, phosphorus and iron, among which the lithium source with cost accounting for more than half is the most scarce. The price of battery grade lithium carbonate has increased dramatically in the past year, from 50000 yuan / ton at the beginning of 2021 to 470000 yuan / ton recently. Global lithium resources are concentrated in Australia, South America and other places, and the production expansion cycle is long. The market generally expects that the price of lithium carbonate will remain high during the year.
Therefore, a possible situation is that each lithium iron phosphate production line has been completed, but not every manufacturer can get sufficient raw materials, the actual production capacity will be greatly reduced, and the corresponding lithium iron phosphate price will remain strong.
This trend has shown signs. Many companies have planned iron phosphate and lithium iron phosphate materials at the same time when doing production expansion projects, and the specific production plan can be moved between them. The reporter learned that many companies plan to give priority to the production of iron phosphate in phase I, and then extend to lithium iron phosphate according to the situation of lithium carbonate resources.
“However, although many manufacturers are doing iron phosphate, very few can really do well, and there may not be so much effective capacity.” A person who has done quality control management in the battery factory told reporters that compared with the synthesis of lithium iron phosphate, the preparation of upstream iron phosphate is more difficult. It is impossible to run in without two years from research and development to real use in the battery. The verification cycle of light in the battery factory will take one year.
Taking the transformation path of titanium dioxide enterprise Anhui Annada Titanium Industry Co.Ltd(002136) as an example, the company began to make iron phosphate in 2013, completed and put into operation in 2015, and gradually expanded the production scale and supplied the market in large quantities in recent two years. “Considering the investment risk, we didn’t invest on a large scale at first, but only made a small test. Later, the technology gradually matured, superimposed the cost advantage and the pull of the downstream market, and then slowly changed from the initial thousands of tons to the current 50000 tons. With the new round of production expansion, the production capacity will increase to 100000 tons / year this year.” The relevant person in charge told reporters.
Considering various factors, lithium iron phosphate is still some time away from overcapacity. “If we follow the announcement plan, we can clearly say that there will be surplus in the second half of this year at the latest in the first half of next year. However, observing the current production progress in the industry, this time point may be delayed by 1-2 years, and there will be new capacity this year, but there will be no surplus for the time being.” The above phosphorus chemical industry said.
bulk test cost control
When the production capacity is released centrally, it will inevitably bring a round of industry reshuffle. The TWH era has driven millions of tons of lithium iron phosphate, making this small material originally belonging to fine chemical industry gradually bulk. After the convergence of products, the core of competition will closely focus on the capacity scale and cost control ability.
Traditional manufacturers present the situation of Hunan Yuneng, Shenzhen Dynanonic Co.Ltd(300769) and Hubei Wanrun, and may get out of differentiation in the future. At present, the capacity expansion project of Hunan Yuneng has reached 770000 tons and the capacity expansion project of Shenzhen Dynanonic Co.Ltd(300769) has reached 620000 tons; Hubei Wanrun is slightly backward. The IPO projects include 50000 tons of lithium iron phosphate capacity.
Traditional manufacturers have gradually started from tens of thousands of tons to hundreds of thousands of tons. In contrast, cross-border companies are more aggressive. There are not a few companies planning 200000 tons or even 500000 tons at one stroke. However, the reporter learned that cross-border manufacturers usually do not have the support of actual orders or intended customers when formulating production expansion plans. On the one hand, the set capacity figures come from the prediction of the overall scale of the downstream market, on the other hand, they come from their own conditions and consistent big chemical thinking.
Some capacity planning may be mixed with water. “The ‘veteran’ of lithium iron phosphate has a clear understanding of the development of the industry and runs in well with suppliers and downstream customers. They have a lot of orders in their hands. As long as the financial strength is sufficient to support, the expansion of production is naturally unambiguous. I think the probability of production capacity landing is at least more than 80%.” Li Liang said, but for new players, we should keep a rational attitude. Personally, I think it’s very powerful to have a production rate of 20% in the end.
“If the scale of production expansion is large enough, the government will give enough support, including resources, examination and approval, industrial chain integration and other aspects. Now many enterprises play the game of planning a large capacity first, and then investing and building it by stages. The first phase of the project is basically a small test, and then make adjustments according to the market situation.” A senior lithium battery practitioner in South China said, but now many local governments have gradually returned to rationality, and the target of attraction is generally only for head enterprises.
It is worth noting that some cross-border manufacturers do not have corresponding technical teams for the production of lithium iron phosphate. Insiders told reporters: “some manufacturers have no talent reserve, and it is difficult to recruit outside. Most of the really excellent talents are bound by equity, or give priority to the battery factory. So they go to the chemical design institute to issue the drawing scheme, and the design institute will find the traditional phosphate material factory to seek specific technical support.”
However, if the early difficulties can be overcome and the production capacity can be achieved, cross-border manufacturers will give full play to the cost advantage of the resource side. Phosphorus chemical manufacturers can provide their own phosphate rock, and titanium dioxide manufacturers can use ferrous sulfate as iron source.
Regardless of the impact of lithium resources, the cost advantage of phosphorus chemical enterprises is more prominent in the iron phosphate ring section. Yu Tong, a battery material analyst at Shanghai Nonferrous Metals network, told reporters that phosphoric acid accounts for 70% of the cost of iron phosphate, so it is the main factor affecting the price of iron phosphate. It is estimated that the cost of iron phosphate manufacturers without raw material advantages is 12600 yuan / ton, the cost of manufacturers with iron source advantages is 11800 yuan / ton, and the cost of manufacturers with phosphorus source advantages is 11000 yuan / ton.
“The final competition is who can master the whole set of technology and combine phosphorus, iron, lithium and other resources to minimize production costs and maximize benefits.” The above-mentioned lithium battery practitioners in South China said.
lithium iron phosphate faces the challenge
Lithium iron phosphate will shine in 2021 with its cost-effective advantages, but there are still many variables whether it can be accepted by the market. The vitality of this material itself is directly related to whether there is a demand for investment and construction capacity, as well as the prospects of manufacturers in the field.
Lithium iron phosphate’s biggest competitor is ternary with the advantage of energy density. In terms of cost, the two materials also need lithium resources, but the nickel and cobalt used in ternary are more expensive than the phosphorus and iron of lithium iron phosphate, so the cost is higher. According to the latest market price of xinlune lithium battery, the price of ternary battery cell is 820 yuan / kWh, while the price of lithium iron phosphate is 690 yuan / kWh, which means that the cost of adopting ternary scheme for a 50 degree car will be 6500 yuan higher.
Driven by domestic Tesla Model 3, model y, Wuling Hongguang Mini EV and other popular cars, the installed capacity of lithium iron phosphate battery exceeded three yuan in 2021. According to the data of China automotive power battery industry innovation alliance, the cumulative loading volume of China Shipbuilding Industry Group Power Co.Ltd(600482) batteries in 2021 was 154.5gwh, including 79.8gwh of lithium iron phosphate batteries, accounting for 51.7%, with a year-on-year growth rate of 227.4%, four times that of ternary batteries.
However, lithium iron phosphate, which focuses on cost performance, can not stand the long-term price rise. Li Jigang said that under the current price of lithium iron phosphate, the acceptance of the power battery market is in a critical state. The downstream is willing to sacrifice profits temporarily in order to compete for market share. At present, the price of energy storage lithium battery has no future. In the consumer electronics market, “many manufacturers have stopped production since October last year and lay flat”.
An insider of a battery material factory in North China told reporters that in 2022, with the gradual output of nickel mines in Indonesia and the gradual recovery of cobalt mines in Africa, the prices of nickel and cobalt will gradually return, and the price competitive advantage of high nickel ternary materials will be gradually reflected.
In terms of energy density, Byd Company Limited(002594) blade battery, Contemporary Amperex Technology Co.Limited(300750) CTP (cell to pack) and other technologies optimize the battery structure and remove modules, so as to improve the volume utilization of the battery pack. However, from the performance of the material itself, Li Jigang believes that the energy density of lithium iron phosphate is close to the ceiling and there is little room for improvement. In the pursuit of electric vehicles for mileage and intelligent functions, lithium iron phosphate may not be satisfied.
When the ceiling of lithium iron phosphate appears, the cost performance advantage is no longer, and other technical routes will usher in opportunities. Li Liang said that at present, lithium manganate batteries are slowly being favored by the industry. Preparing a ton of lithium manganate requires 0.22 tons of lithium carbonate, which is 0.03 tons less than lithium iron phosphate. When the current price of lithium carbonate is as high as 470000 yuan / ton, the cost of this item alone can be reduced by 14000 yuan, and the most expensive lithium manganate is 90000 yuan / ton at present; In addition, lithium manganate has basically solved the problem of manganese dissolution, greatly improved its service life, platform voltage and energy density, and has the same strength as lithium iron phosphate.
In the field of energy storage, lithium iron phosphate will usher in a positive confrontation with sodium ion batteries. Sodium ion batteries have cost advantages due to the abundance of resources, and have better low temperature and fast charging performance, which can adapt to high cold areas. Contemporary Amperex Technology Co.Limited(300750) released its first sodium ion battery in July last year and said that the energy density of the battery can reach 160wh / kg, which is close to that of lithium iron phosphate battery. The energy density of the next generation sodium battery can reach 200wh / kg.
At present, sodium ion batteries have not been industrialized, but many industry insiders said that the current abnormally high lithium price will stimulate the replacement process of sodium batteries. Large scale commercial use is no longer far away, Contemporary Amperex Technology Co.Limited(300750) plans to put into operation a sodium ion battery production line in 2022 and basically build the industrial chain in 2023.
At the same time, lithium iron phosphate is also realizing self innovation through material technology. One of the upgrading directions includes lithium manganese iron phosphate. Li Jigang said that compared with lithium iron phosphate, the energy density of lithium manganese iron phosphate increased by 20% and the overall cost decreased by 10%. At present, it has gradually increased in small electric fields such as two wheeled electric vehicles; After manganese iron lithium composite ternary material, the energy density is increased by 30%, which has been applied to passenger cars in small quantities. Contemporary Amperex Technology Co.Limited(300750) added other metals on the basis of lithium manganese iron phosphate. The company disclosed in the recent investor exchange that the new product m3p will be launched soon, which is called “ternary of phosphate system”, and the cost is lower than ternary.
