Over the past year, the production and sales of new energy vehicles have continued to reach a new high, and the contradiction between supply and demand of raw materials has become increasingly prominent. Under the pressure of price rise, the value chain of the power battery recycling industry of "turning waste into treasure" has been revalued, and the prosperity has begun to rise, attracting industrial capital to compete.
In the bullish market of raw materials, the recycling price of waste batteries has also risen. At present, the discount coefficient of ternary material recycling has jumped from about 70% in the middle of last year to 140%, and the waste lithium iron phosphate cathode powder has doubled in one month. Although the profit margin of power battery recycling enterprises has been improved, too high prices will bring a series of risks such as inventory and cash flow.
The long-term development of the industry cannot be supported by the price rise of raw materials alone. After the tide fades, a new round of industry reshuffle is bound to come, and recycling enterprises with channel and technical advantages will win in the competition. For the whole industry, the relationship between rights and responsibilities in the recycling chain needs to be straightened out to solve the problems of disorderly competition and environmental pollution, so as to meet the arrival of a larger wave of decommissioning.
recycling prices rise
"the price is rising too fast! Now the price system of the whole recycling market is disordered." Zhao weiduo, deputy general manager of Hunan Shunhua Lithium Industry Co., Ltd., told the reporter of securities times · e company, "last January, the waste lithium iron phosphate cathode powder was only 4000 yuan / ton, which rose to 40000 yuan / ton in January this year. What's more exaggerated is that it doubled directly in February, and now the price has reached about 80000 yuan / ton."
The rise in the price of recycling end comes from the soaring price of power battery raw materials represented by nickel, cobalt and lithium. In the past year, battery grade lithium carbonate has gone all the way from 50000 yuan / ton, and the current quotation has exceeded 500000 yuan / ton, up 10 times that of the same period last year; The current quotation of electrolytic cobalt and electrolytic nickel in China reached 570000 yuan / ton and 220000 yuan / ton, with a year-on-year increase of about 60% and 80% respectively. "Due to the shortage of raw material resources and the superposition of double carbon goals, it is obvious that the industrial chain has paid more attention to the recycling end of lithium batteries." Zhao weiduo said.
At present, the mainstream waste batteries in the market are divided into ternary lithium batteries and lithium iron phosphate batteries. Ternary lithium batteries are generally used for recycling, extracting valuable metal materials from waste batteries. The finished products include nickel sulfate, cobalt sulfate and lithium carbonate. Lithium iron phosphate batteries are mainly used in echelon utilization scenarios such as energy storage power stations, low-speed electric vehicles and electric tools. With the rise of the price of lithium carbonate, More and more enterprises directly use the recycled lithium iron phosphate battery for lithium recovery.
It is reported that the recovery pricing of ternary batteries is based on the cobalt and nickel prices of Shanghai Nonferrous Metals network and multiplied by a certain coefficient. Although lithium does not participate in the pricing in the recovery process, it will affect the coefficient to a great extent; Lithium iron phosphate battery is mainly used to extract lithium element, and its recovery price is priced according to lithium point. Taking the price of metal lithium as a reference, the current purchase coefficient is about 6-70%. "In August last year, the overall discount coefficient of ternary lithium battery recycling was still 65% ~ 75%, which reached more than 100% at the end of last year. Now the average level has risen to 120% - 130%. If it is ternary positive electrode, because the content of lithium carbonate is higher, the purchase coefficient can even reach 140%." Miracle Automation Engineering Co.Ltd(002009) relevant person in charge told the reporter of securities times · e company that the change of procurement coefficient actually reflects the supply-demand relationship of the whole market and the change of market prices of other metals except cobalt and nickel.
70% of the cost of recycling enterprises comes from raw materials. At present, the procurement coefficient is seriously inverted, which will obviously increase the operation cost. But even so, it is still difficult to stop the enthusiasm of the industry to "grab batteries". "According to the current market demand and capacity release, we expect that the price of lithium carbonate should not decline significantly this year and will remain high." A lithium battery industry chain investor in East China said that battery recycling enterprises are still profitable.
Miracle Automation Engineering Co.Ltd(002009) relevant person in charge told reporters that at present, the gross profit margin of the recycling end may decline due to the increase of raw material procurement cost, but the prices of finished products such as lithium carbonate are also rising synchronously, and the overall profit space has been improved.
"In the process of rising lithium carbonate prices, recycling enterprises generally make money, just earn more and earn less." Zhao weiduo admitted that, however, due to the high market prosperity, the current rush for goods atmosphere is relatively strong, the battery recycling price has been bid up, and professional recycling enterprises will "expel good money" because of the high fixed cost.
impetuous mentality buries risk panic
The high outlook of the power battery recycling industry can be seen from a set of data. Enterprise survey data show that there are 38500 existing power battery recycling enterprises in China, of which 3321 new power battery recycling related enterprises were added in 2020, with a year-on-year increase of 142.94%; In 2021, 24400 new companies were added, with a year-on-year increase of 635.17%.
According to Zhao weiduo, among the more than 20000 recycling enterprises newly added in 2021, there are a large number of intermediate traders who do not do processing and smelting, but only earn the price difference in the circulation of batteries.
Miracle Automation Engineering Co.Ltd(002009) also said in the survey of receiving investors that according to the preliminary statistics of the company's procurement, about 70% of the raw materials come from social traders and 30% from battery factories.
Zhao weiduo pointed out that when the price is bullish, some intermediate trade associations hoard a large number of batteries or waste materials, and even form a price monopoly advantage in a certain region. In addition, there are battery factories or material factories that cannot cover the goods, which has created panic in the recycling market and raised the market price and expectation of battery recycling to a certain extent.
According to the above-mentioned investors, the overall mentality of the battery recycling industry is relatively impetuous. "Some enterprises bought raw materials at the low point of last year, and the price soared in the short term. They can easily earn a large price difference, which is much better than working hard to earn processing fees, which virtually killed the fighting spirit in the smelting and processing industry; there are also enterprises that were mainly engaged in echelon utilization or recycling before. When they see the high price of waste batteries, they will even set up separate trading companies to directly enter low and exceed the trade price difference."
"At present, the water in the power battery recycling industry is large and deep enough, and most of the entrants make money. However, once the prices of materials and batteries fall, a number of enterprises that are not solid enough and try to make fast money will be washed out." Li Liang, deputy general manager of Gaogao (Shenzhen) Technology Co., Ltd., admitted that recycling enterprises need fixed assets and teams to maintain stable production and operation. These are fixed expenses. In addition, they also need to maintain the minimum inventory for continuous production. Nickel, cobalt and lithium are small metals, and the market fluctuates greatly. Once the price starts to turn down, the inventory in the hands of recycling enterprises will fall rapidly, but the production line cannot be started. The more production may mean more losses. If it is not produced, the risk of inventory depreciation will be higher.
"Generally speaking, when recycling batteries or waste materials, recycling enterprises require cash in stock. When selling finished products, in the face of large material factories or battery factories, there is usually a certain accounting period because the voice is not strong enough. For recycling enterprises with small scale, the rise in the price of recycled batteries means a greater occupation of funds.
”Zhao weiduo told the reporter of securities times · e company that the shipping cycle from waste or retired battery procurement to the generation of finished products such as nickel sulfate, cobalt sulfate and lithium carbonate is one to two weeks. Once the price of lithium carbonate falls, it will bring huge cash flow risk to recycling enterprises.
"At present, the price of raw materials is at a high level. The safest way for formal recycling enterprises is to fast in and fast out, set production according to sales, and purchase upstream raw materials guided by orders on hand. In this way, although the inventory price difference may not be earned, the risk can be minimized." The aforementioned investors said.
technology oriented
The field of battery recycling has attracted players from all walks of life, almost connecting the industrial chain of new energy vehicles, involving different backgrounds such as vehicle manufacturers, battery manufacturers, material factories and third-party recycling enterprises. Among them, the vehicle factory and battery factory grasp the resources, which is the object that the material factory and recycling enterprise compete to bind.
Material factories have the most power to do recycling business, because the extracted metal can be directly used as raw materials, which brings cost advantages. The gross profit rate of three kinds of cobalt oxide materials reported by and four kinds of cobalt oxide materials in the same period was 12.63%, and the gross profit rate of three kinds of cobalt oxide materials reported by and four kinds of cobalt oxide materials in the same period was 25.63%, respectively.
In the context of rising prices of raw materials, the urgency of ensuring supply has further prompted material factories to recycle in the end. One way is to build a recycling production line. For example, Sanyuan Material Factory Zhejiang Huayou Cobalt Co.Ltd(603799) has two recycling enterprises of recycling technology and renewable resources. At present, it has an annual capacity of 65000 tons of waste battery materials; The other is to bind the resources of third-party recycling enterprises through investment or strategic cooperation. For example, Ningbo Ronbay New Energy Technology Co.Ltd(688005) recently reached an agreement with Gem Co.Ltd(002340) to invest in the power regeneration of Gem Co.Ltd(002340) battery recycling company, and purchase no less than 300000 tons of precursors from the latter in the next five years.
Battery factories are involved in a similar way to material factories. Leading enterprises are spending a lot of money to cultivate their own recycling sector Guangdong Bangpu, a Contemporary Amperex Technology Co.Limited(300750) holding subsidiary, is responsible for the battery recycling business. The Bangpu integrated new energy industry project in Yichang started construction at the end of last year, with a total investment of 32 billion yuan Gotion High-Tech Co.Ltd(002074) will also launch a 12 billion yuan project in Hefei, including the production base of upstream raw materials and battery recycling of power lithium batteries. In addition, Farasis Energy (Gan Zhou) Co.Ltd(688567) , honeycomb energy and other battery plants cut into the recycling industry chain through investment cooperation.
The background of third-party recycling enterprises is diverse. In addition to the above Gem Co.Ltd(002340) , which is specialized in resource recycling, there are Guangdong Guanghua Sci-Tech Co.Ltd(002741) , which is mainly engaged in PCB and other chemicals, Miracle Automation Engineering Co.Ltd(002009) , automotive intelligent equipment provider Miracle Automation Engineering Co.Ltd(002009) , environmental protection enterprises Beijing Geoenviron Engineering & Technology Inc(603588) and Wangneng Environment Co.Ltd(002034) , etc.
Companies in different industries are closely related to the recycling chain. The reporter of securities times · e company noted that Guangdong Guanghua Sci-Tech Co.Ltd(002741) itself has a ternary cathode material business, and recently is establishing cooperation with Aodong new energy, Panasonic, Lishen battery and other companies Miracle Automation Engineering Co.Ltd(002009) relying on its main business, it has close contact with automobile enterprises, covering post market businesses such as automobile disassembly and remanufacturing for a long time; Environmental protection enterprises mostly cut into battery recycling by means of acquisition, and relatively late.
"Although third-party recycling enterprises have professional capabilities, they lack recycling channels. They need to talk about cooperation with battery manufacturers and vehicle manufacturers. They also need to find a way out for recycled resources or batteries used in echelons. There is a lot of work to be done." Moke, founder of real lithium research, told the reporter of securities times · e company that the development prospect of recycling business will be better if the supply channels and downstream sales depend on one side.
It is worth mentioning that the current recycling resources such as waste and leftover materials produced by battery factories are more popular in the market, because the quality and consistency of these materials are relatively high, which saves the disassembly cost for recycling enterprises and can produce a higher rate of return.
In terms of technology, many industry insiders believe that the key is to reduce costs and improve the recovery rate. A lithium battery industry analyst told the reporter of securities times · e company that at present, the recovery rate of nickel and cobalt is relatively high, and the difficulty lies in the extraction of lithium.
According to Zhao weiduo, in the current mainstream hydrometallurgy process, the order of extracting lithium from ternary materials is generally after cobalt and nickel. The average recovery rate of lithium is 70 ~ 75%, and those with better technology can exceed 80%, but the purity is only 80 ~ 85%. If battery grade lithium carbonate is produced, it still needs to go through a processing process; If the wet preferential lithium extraction process is adopted, the recovery rate of lithium in ternary materials can reach 95%, and the recovery rate of lithium in lithium iron phosphate material can also reach 92%, with higher purity. The produced lithium carbonate and iron phosphate can be directly returned to the battery production system. "When the cost of raw materials is close, the higher the recovery rate and the higher the added value of finished products, it means greater profit margin."
How to respond to different market demands for flexible production is also an important technical capability of recycling enterprises Miracle Automation Engineering Co.Ltd(002009) relevant person in charge said, for example, when the prosperity of the battery industry is high, cobalt sulfate applied to battery materials can be produced, and when the prosperity of the battery industry is declining, products applied to different industries such as magnetic materials industry, ceramic color glaze industry, rubber or alloy binder industry can be changed. In addition, the raw material end of battery recycling is non-standard products mixed with many kinds of batteries. How to produce standard products consistent with the quality of new materials is also an important technical barrier in the recycling industry.
"Factory capacity and channel construction complement each other. Only by combining the two can we maximize the value of the overall enterprise operation. At this stage, we think factory capacity is the foundation. In the market competition of recycling channels, only when the process level is mature enough can we ensure to win enough partners in channels." Miracle Automation Engineering Co.Ltd(002009) relevant person in charge said.
\u3000\u3000 "From the perspective of investment, cathode material manufacturers will not receive much attention, because the recycling business is only a supplement to their source of raw materials. Among the third-party recycling enterprises, some companies originally had low profits. Recycling, as a separate sector, can contribute greater performance flexibility, so they will be hot fried by funds. But generally speaking, the recycling industry is being fried as a half cycle stock, which has little impact on the trend of metal prices The dependence is relatively strong. " The above lithium industry analyst said.
Channel is king
Although the rise in metal prices has pushed the recovery of power batteries, the industry as a whole is still in the primary stage of development. It takes more time to improve the recovery network or the amount of retired batteries.
Competing for channels has become the key to the competition of recycling enterprises, which just reflects that the current channel construction is not complete. The reporter of securities times · e company observed last year that most of the retired batteries actually flow into informal small workshops, and this disorder has not been fundamentally reversed.
"how to collect the batteries is a big problem," Merco said bluntly that small workshops generally pick out the batteries that can be reused and process them into batteries in subdivided fields such as pesticide sprayers and fishing tools. Most of the batteries that cannot be used in echelons are discarded at will. Even if they are sold, regular recycling enterprises dare not collect the batteries with unknown channels.
From the perspective of resource reuse, the current recycling industry has little support for raw materials. The aforementioned investors said that taking lithium carbonate as an example, the lithium carbonate regenerated through recycling channels currently accounts for only about 4 ~ 5% of the whole market.
It is uncertain where there will be more waste batteries, and recycling enterprises can only make multi-channel layout to ensure safety. In Li Liang's view, at present, recycling enterprises are basically in a state of fighting on their own, especially when the material price is good. Each enterprise has its own "hidden weapon" to make money, but it has not formed an industrial joint force. Disorderly competition is very serious, which has also caused a waste of resources to some extent.
Due to the proximity to resources and technology, battery factories will play a prominent role in the chain in the future. Li Liang said that with the introduction and evolution of power exchange mode, lifelong warranty and other services, the battery will gradually focus on the vehicle factory and battery factory from scattered corners. Since the vehicle factory will generally hand over the after-sales of the battery to the battery factory, the battery factory will become the main body of echelon utilization. First of all, the battery factory has technical advantages, which can easily solve many disassembly problems; Secondly, the battery factory can accurately evaluate the residual value of the battery to maximize the value. Enterprises in the recycling industry chain should give more consideration to how to unite with battery factories.
so who should build the channel according to the production responsibility extension system, the vehicle enterprise should be the subject of responsibility. Although at present, automobile enterprises have set up more than 10000 recycling outlets relying on 4S stores and maintenance points, according to the previous investigation by the reporter of securities times · e company, they are basically in a state of virtual existence, and the vehicle factory lacks power.
the crux of problem lies in the dislocation of the relationship between rights and responsibilities in the recycling chain Mercer said that although car companies are the main body of recycling, the ownership of the sold cars is in the hands of consumers, who have the right to deal with the whereabouts of batteries, which gives informal enterprises an opportunity because they have low production compliance costs and can offer higher purchase prices.
"The specialty of automobile enterprises lies in the matching of vehicle manufacturing and system. Production, supply, secondary utilization and recycling are the expertise of battery enterprises, but they are excluded from the recycling system; third-party recycling enterprises have strong technical characteristics, but they do not master resources and cannot assume the main responsibility of recycling." Zhao weiduo said.
In fact, regulators have tried to regulate the battery recycling industry. Up to now, the Ministry of industry and information technology has published a total of three batches of enterprises that meet the industrial standard conditions for comprehensive utilization of waste power batteries of new energy vehicles, commonly known as the "white list" of the industry, and the regular army has expanded to 47. According to insiders, at present, representative battery factories and vehicle factories such as Byd Company Limited(002594) , BAIC, SAIC, Contemporary Amperex Technology Co.Limited(300750) , Gotion High-Tech Co.Ltd(002074) and bus groups such as Shenzhen, Yangzhou and Hefei clearly require the bidding buyer to be an enterprise on the "white list" during the bidding for the recovery of retired batteries and corner waste.
"At present, most of the documents issued by the state are guiding or recommended guidance documents, mostly self-discipline regulation of the industry, which can be used as a reference and guidance for the backbone enterprises with standardized operation, but they have no binding effect on most small workshops." In this regard, Zhao weiduo suggested upgrading the regulations and standards on the recycling, transportation and storage of waste power batteries, strengthening the standardization of the industry and deterring disorderly competition.
After the formation of industry norms, the market still needs to wait for a larger wave of decommissioning. According to the Soochow Securities Co.Ltd(601555) Research Report, the demand for lithium battery recycling is expected to be 83gwh in 2022 and 1318gwh in 2035. If the metal price is calculated on February 9, 2022, the industry market space will reach 294.6 billion yuan in 2035, with a compound growth rate of 18% from 2020 to 2035.
The above lithium battery analysts said that the quality of power batteries in the current recycling channels is still relatively low, mostly used in early electric buses and operating vehicles, and the metal content is not high. When the number of retired batteries increases after 3-5 years, regular enterprises can enjoy reasonable profits by relying on the scale effect, and the industry pattern will naturally become clearer.
\u3000\u3000
