Because “there is a mine at home”, South America, which has always been low-key in the global economic landscape, suddenly attracted the attention of many power battery industry chain enterprises led by China. In July 2021, Ganfeng Lithium Co.Ltd(002460) launched a tender offer for Canadian Millennium lithium industry. Unexpectedly, it was “intercepted” by Chinese peers Contemporary Amperex Technology Co.Limited(300750) . Just when many people thought that Millennium lithium was about to be pocketed by Contemporary Amperex Technology Co.Limited(300750) , American lithium fell from the sky and finally completed the acquisition. “Ningwang” and “lithium king” have been reversed several times, which can be regarded as the epitome of the increasing competition for lithium resources.
With the wave of electric vehicles and the trend of subversion, the status of lithium resources has suddenly changed, holding the lifeline of the development of new energy vehicles. Since this year, the global delivery of electric vehicles has continuously reached a new high, and the situation of lithium batteries in short supply has become increasingly prominent. In fact, the problem of tight supply and demand of lithium batteries is not limited to the current, and the strong demand in the long term also strengthens the rationing and value of the resource end.
The reporter of Securities Daily noted that since this year, established car enterprises in Europe, the United States, Japan and South Korea have set a clear timetable for stopping the sale of fuel vehicles. On October 26, China also issued the action plan for reaching the carbon peak by 2030, which defined the long-term goal for the first time: by 2030, the proportion of new energy and clean energy powered vehicles will reach about 40%. The policy defined the development prospects of related industries, power battery manufacturers have announced to double their production expansion, and the market hoarding sentiment is high. In addition, the seller’s market influence has increased, which has exacerbated the imbalance between supply and demand in the lithium battery market and promoted the continuous upward quotation of lithium ore.
Beijing Centergate Technologies (Holding) Co.Ltd(000931) in an interview with the Securities Daily, the Puritan, Secretary General of the new battery technology innovation alliance, said that the voice of lithium mine in the industrial chain is very important, the cost advantage of enterprises with high-quality lithium resources is prominent, the profit elasticity will be fully released, and the downstream enterprises with short layout at the resource end will put pressure on their profits.
Global lithium resources not only show the characteristics of centralized regional distribution, but also show the characteristics of highly centralized control. According to the research report released by Guotai Junan Securities Co.Ltd(601211) securities, 77% of the global lithium market share is controlled by five major companies. Among them, China’s Ganfeng Lithium Co.Ltd(002460) and Tianqi Lithium Corporation(002466) markets account for 16% and 14% respectively, and the remaining 47% of the market share is divided by three companies: American Yabao ALB (25%), Chilean mining and chemical sqm (15%) and American Livent (7%). The rivals of Chinese battery manufacturers are not limited to China’s “two giants of lithium industry”, but also a number of overseas lithium giants.
“From the perspective of supply stability and cost control, controlling lithium ore means controlling core raw materials.” According to the Puritans, lithium resources have become the primary premise of market competition under the background of the deterministic growth of downstream lithium demand.
lithium battery enterprises are busy expanding production
it is difficult to change the imbalance between supply and demand
According to the data released by China Automobile Industry Association, from January to November this year, the cumulative sales volume of new energy vehicle market reached 2.99 million, a year-on-year increase of 166.8%. According to the latest prediction of China Automobile Association, the sales volume of new energy vehicles this year is expected to exceed 3.4 million.
With the significant increase in the sales of new energy vehicles, the demand for automotive power batteries and energy storage batteries has also increased significantly. The short-term supply is short of demand, and the long-term demand is clear, which has achieved the fundamental logic of unlimited scenery in the lithium battery industry this year. “Charging for capacity” has become the core topic of the development of lithium battery industry in 2021.
According to the reporter of Securities Daily, from January to October 2021, the installed capacity of global power batteries reached 225gwh, a year-on-year increase of 116%. Among them, China Shipbuilding Industry Group Power Co.Ltd(600482) battery loading volume was 107.5gwh, with a year-on-year increase of 168.1%.
The demand for energy storage batteries has also increased significantly. Taking atlas as an example, as a representative of global energy storage enterprises, from January to September this year, the energy storage projects under construction increased from 0.9gwh to 2.9gwh, and the reserve projects increased from 6.5gwh to 21gwh to prepare for the rapid growth of energy storage battery demand.
On the supply side, compared with the sharply growing market demand, the growth of lithium battery capacity does not match. The reporter of Securities Daily noted that lithium battery suppliers, including Contemporary Amperex Technology Co.Limited(300750) , Byd Company Limited(002594) and honeycomb energy, began to expand production capacity on a large scale only at the end of last year. However, the capacity expansion of lithium battery has a certain lag. The construction cycle of plant construction and equipment installation takes 6 to 9 months, and the ramp up cycle of capacity takes 3 to 6 months. It also takes time to reach a certain capacity utilization rate (involving technical level, production experience and product structure), resulting in the “remote water can not solve the near thirst” of lithium battery supply, and the continuous imbalance between supply and demand.
Lithium hexafluorophosphate is the most important component of power battery electrolyte (accounting for about 43% of the total cost of electrolyte). Since this year, the market demand has increased significantly, and the price has risen all the way. Statistics show that the market quotation of lithium hexafluorophosphate in September 2020 is about 70000 yuan / ton, but as of December 22, 2021, the market quotation of lithium hexafluorophosphate has exceeded 500000 yuan / ton. Even so, many manufacturing enterprises have basically no inventory and are short of cash, usually focusing on delivery orders.
“At present, several industry leaders who have issued announcements on supply and production expansion can’t approve their project initiation, approval, compliance and other procedures for a year and a half.” An employee in the lithium battery industry told the Securities Daily that the listed lithium battery companies that are starting to expand their production are paying for the equipment, but the equipment processing progress is slow. In order to ensure the supply of raw materials, since May this year, leading listed companies in the lithium battery industry have successively signed a number of long-term agreements on lithium hexafluorophosphate, and the collection method is also close to the cash and spot method.
“Behind the continuous rise in the price of lithium hexafluorophosphate is the epitome of the continued popularity of the new energy vehicle and power battery market. As the backward production capacity is gradually cleared, the market production capacity and orders will move closer to high-quality leading enterprises.” In an interview with Securities Daily, Cao Bin, chairman of Tianzhu Hongfu lithium industry, predicted that lithium hexafluorophosphate would still maintain a high prosperity in 2022.
global lithium battery capacity is gradually released
the planned capacity in 2025 will exceed 2500gwh
According to the prediction of many institutions, the global demand for lithium batteries will exceed 1500gwh in 2025. Based on an average capacity utilization rate of 60%, the corresponding capacity is 2500gwh. According to incomplete statistics by the reporter of Securities Daily, the total planned capacity of major lithium battery enterprises in the world in 2025 has exceeded 2500 GWH.
Since receiving Tesla‘s order in 2020, Contemporary Amperex Technology Co.Limited(300750) has announced 8 power battery expansion projects. According to the data disclosed in this year’s semi annual report, as of the end of June 2021, Contemporary Amperex Technology Co.Limited(300750) has an annual power battery capacity of 65.45gwh, and the capacity under construction has reached 92.5gwh. According to the research reports of several securities companies, the capacity planning target of Contemporary Amperex Technology Co.Limited(300750) in 2025 is close to 600gwh; LG’s planned capacity will reach 400gwh. In addition, the relevant person in charge of honeycomb Energy said in an interview with the reporter of Securities Daily that the company has launched a new strategic plan, and the planned capacity in 2025 is expected to exceed 200gwh.
In terms of power battery demand, if the global passenger vehicle sales volume reaches 80 million in 2025, the corresponding electric vehicle sales volume will be 20 million estimated by 25% of the electrification penetration rate. If the average carrying capacity of each electric vehicle is 40kwh, the battery demand of electric passenger vehicles alone is expected to reach 800gwh, which does not include the share of subdivided fields such as electric commercial vehicles, electric two wheeled vehicles, electric engineering machinery and electric ships.
In terms of energy storage battery demand, according to the data of the International Energy Agency and China Photovoltaic Industry Association, the global photovoltaic installed capacity is conservatively estimated to reach 1810gw in 2025; According to the data of the Global Wind Energy Council, the global wind power installed capacity is expected to reach 1210gw in 2025. According to this calculation, the total installed capacity of global photovoltaic and wind power new energy will be 3020gw by 2025. If calculated according to the supporting energy storage permeability of 25%, the average installation probability of 20% and the configured energy storage of 2 hours, the energy storage battery demand brought by photovoltaic and wind power side alone will reach 300gwh. In addition, grid side energy storage, user side energy storage (including household energy storage) and other subdivided fields will also have a certain demand for energy storage batteries.
From the long-term global market demand to the global production capacity demand, we can see the strategic significance behind the head enterprise’s production capacity planning goal: that is, only when the production capacity planning is established, can the systematic work such as capital financing, equipment procurement, supplier construction and downstream strategic customer development be supported. The head enterprise publicizes the production capacity target, which can obtain higher valuation for financing, obtain more favorable conditions for equipment and raw material procurement, and develop and improve the strength and image for customers.
“Only the effective production capacity that can keep up with the development situation of the industry and meet the market demand is the real production capacity.” “Up to now, one of the biggest problems facing the power lithium-ion battery industry is structural overcapacity,” Fang Jianhua, President of the new energy vehicle venture capital sub fund of the national scientific and Technological Achievements Transformation Fund, told the Securities Daily
In Fang Jianhua’s view, in the case of structural overcapacity of power lithium-ion batteries, it is a great risk to local governments, banks and companies. With the rapid development of battery technology, the capacity under construction is likely to become a pile of scrap iron in two or three years. Fang Jianhua suggested: “we should appropriately control the investment structure, comply with the general trend of technological progress, and plan the actual production capacity according to the characteristics of China’s market development.”
upstream resources become a must
lithium competition is a “war” that can’t afford to lose
On the one hand, lithium prices soared all the way, on the other hand, battery enterprises produced at full capacity, but what did not match the increase in battery installed capacity was that battery enterprises did not obtain corresponding profit growth.
The reporter of securities daily observed that the financial reports recently released by five listed companies, including Contemporary Amperex Technology Co.Limited(300750) , Eve Energy Co.Ltd(300014) , Gotion High-Tech Co.Ltd(002074) , Sunwoda Electronic Co.Ltd(300207) , Guangzhou Great Power Energy&Technology Co.Ltd(300438) , showed that only the gross profit margin of Contemporary Amperex Technology Co.Limited(300750) was positive month on month in the third quarter of this year. Among them, Eve Energy Co.Ltd(300014) the gross profit margin in the third quarter of this year was 21.53%, which has declined for four consecutive quarters, nearly 10 percentage points lower than the same period last year; The gross profit margin of Gotion High-Tech Co.Ltd(002074) and Guangzhou Great Power Energy&Technology Co.Ltd(300438) decreased for two consecutive quarters by 9% and 3% respectively.
In sharp contrast, upstream material suppliers ushered in a big burst of performance. Among them, Ganfeng Lithium Co.Ltd(002460) one of the “two giants of lithium industry” achieved a revenue of 7.04 billion yuan in the first three quarters of this year, a year-on-year increase of 81.19%; The net profit attributable to the parent company was 2.473 billion yuan, up 648.24% year-on-year. Tianqi Lithium Corporation(002466) also gradually got out of the debt haze. Although the net profit was still losing, the share price soared 175% compared with the beginning of the year.
Although Contemporary Amperex Technology Co.Limited(300750) can still rely on its industry status to sign large orders of long-term association, lock in material costs and maintain its own profitability, there is no doubt that battery manufacturing enterprises have become “migrant workers” of upstream resource enterprises. For battery manufacturing enterprises, in order to reduce costs and compete for the voice in the industrial chain, “mining” has become a move that must be taken.
For local upstream enterprises, it seems inevitable to upgrade the struggle with midstream manufacturers in the future, and the resource reserve will directly affect the current business performance and future development potential. “In the final analysis, it is still a resource problem, that is, there are not enough mines.” A relevant person close to Ganfeng Lithium Co.Ltd(002460) told reporters that upstream enterprises buy a large number of lithium minerals overseas, which can ensure that the price of raw materials is relatively stable in the future and lock in these resources. The core strategy of downstream battery manufacturing enterprises is to ensure the continuity and stability of lithium raw material supply.
It is worth noting that the major European automobile manufacturers led by Germany have begun to pay attention to the battery industry and gradually implement strategies to prevent excessive dependence on foreign parts suppliers. As the former overlord of automobile production and sales, the United States also announced the development plan of new energy vehicles in August this year and issued the national lithium battery blueprint (2021-2030). The goal is to build the processing capacity of lithium battery raw materials in the United States and China and reduce the dependence on sensitive materials.
In this regard, Luan Zhengming, director of the China Mining Federation and executive director of the legal professional committee, suggested that Chinese enterprises should not stay too long in the competition for mineral resources, and it is a big taboo not to lose. Moreover, downstream enterprises should not blindly follow the trend, but do what they can. After the introduction of relevant policies of various countries, the pioneers in the industry are gradually improving the subsidy policy system, and the latecomers are also struggling to catch up. With all forces participating in the competition, the original lithium battery industry pattern will be reshaped.
(Securities Daily)
