“When I went to Jiangxi to investigate in 2020, most wet plants that recycle waste lithium iron phosphate batteries fell into the quagmire of shutdown due to losses.” Zhao Xiaoyong, managing director of Beijing saidemai, told the China Securities Journal. To his surprise, a year later, the situation suddenly changed: in 2021 alone, more than 10000 newly registered enterprises rushed in, and the originally deserted power battery recycling track suddenly became crowded.
The power battery recycling industry started in 2020 and entered the white hot competition stage in 2021. The reason is that the sales volume of new energy vehicles increased significantly in 2021, resulting in the early arrival of the “100 billion outlet” of power battery recycling. However, under the upsurge of “robbing rags” of 10000 enterprises, problems such as disorderly competition, bad money expelling good money, potential environmental hazards and so on have become increasingly prominent.
“100 billion air outlet” arrived in advance
“Under the tide of the development of new energy vehicle industry, power battery recycling has always been regarded as a high-quality track with ‘long slope and thick snow’.” Hunan Corun New Energy Co.Ltd(600478) relevant person in charge Li Ming (a pseudonym) told China Securities Journal that the service life of power batteries installed in early China is generally 4 to 6 years, and the installed capacity starts from 2015. In other words, the battery industry will gradually enter the scrapping period from 2020, that is, the battery recycling industry will gradually enter the scale.
Although the industry has just started, the investment boom of enterprises spurted out, and a power battery recycling war that should not come until a few years later began in advance.
The research report released by Changjiang Securities Company Limited(000783) shows that in 2021, 10700 newly registered enterprises were added in China Shipbuilding Industry Group Power Co.Ltd(600482) battery recycling industry, accounting for 80% of the total enterprises. The originally deserted power battery recycling track suddenly became crowded. Especially since the second half of 2021, Contemporary Amperex Technology Co.Limited(300750) , Guangzhou Tinci Materials Technology Co.Ltd(002709) , Gem Co.Ltd(002340) and other giants have accelerated their admission, directly detonating the investment enthusiasm of the whole track.
Since the second half of 2021, China’s major securities companies have almost shouted the tempting slogan of “100 billion outlets” with one voice. For example, the research report released by Soochow Securities Co.Ltd(601555) pointed out that the market space for power battery recycling is expected to reach 67.5 billion yuan, 138.7 billion yuan and 294.6 billion yuan in 2025, 2030 and 2035 respectively, with a compound annual growth rate of 18% from 2020 to 2035.
Suddenly, like the spring breeze of the night, power battery recycling has changed from few people to the emergence of “100 billion tuyeres”. What happened during this period?
“The main reason is that the sales volume of new energy vehicles in 2021 significantly exceeded expectations, making the peak of power battery recycling several years earlier than originally expected.” Wang Xuelei, power battery analyst of Shanghai Ganglian E-Commerce Holdings Co.Ltd(300226) new energy division, told the China Securities Journal that the market is expected to generally sell 2 million to 2.5 million Shanxi Guoxin Energy Corporation Limited(600617) vehicles in the middle of 2021, and the final actual sales volume is as high as 3.5 million. The sales volume of new energy vehicles significantly exceeded expectations, which also led to the installed capacity of power batteries significantly exceeded expectations, and the prices of non-ferrous metals such as cobalt, nickel and lithium soared under the imbalance between supply and demand. For example, the price of lithium salt rose from 80000 yuan / ton to 500000 yuan / ton in just one year, showing a tense situation of “one product is hard to find”. In this context, the value of cobalt nickel lithium recovery has increased significantly.
“Why did the lithium iron phosphate battery recycling plant that was about to close down come to life all at once? It is because the price of lithium salt soared all at once.” Zhao Xiaoyong told the China Securities Journal that because lithium iron phosphate batteries are not like ternary lithium batteries, they can recover cobalt and nickel in addition to lithium. Before the price of lithium salt rises, the recycling value of waste lithium iron phosphate batteries is very low, which is almost sold as waste iron.
snapping up wind coefficient upside down
The power battery recycling industry has just started, which has triggered a rush of new entrants. What consequences will this lead to Gf Securities Co.Ltd(000776) asserted in the research report that the industry has entered a stage of horse racing and enclosure, resulting in the deterioration of the competitive environment.
Li Ming introduced that the recycling price of waste power batteries is determined by multiplying the current price of cobalt and nickel by a certain discount coefficient. “The recycling discount coefficient was 50% – 60% at the lowest time last year, then rose to 70% – 80%, then rose to more than 100%, and recently reached 106%. The price upside down is due to the sharp rise in the price of lithium salt in waste power batteries.”
In addition to the soaring price of lithium salt, another important reason for the sharp rise in the recovery discount coefficient of power battery is that the “rag grabbing” of 10000 enterprises leads to intense competition.
“The competition in the general industry focuses on the back-end production and sales link, but the competition in the power battery recycling industry focuses on the front-end recycling link. How many waste power batteries can be recycled determines the speed of enterprise development.” Zhao Xiaoyong told the China Securities Journal that a large number of practitioners crowded in in in a short time, resulting in the shortage of waste power batteries and the prevalence of rush buying, which is almost one price a day.
In particular, a large number of small workshop enterprises have rushed into the ranks of buying waste power batteries, making the already white hot competition more disorderly.
Zhao Xiaoyong said that since 2018, the Ministry of industry and information technology has published three batches of enterprises that meet the industrial standard conditions for comprehensive utilization of waste power batteries of new energy vehicles, that is, the “white list” enterprises commonly known in the industry, with a total of only 47. In other words, the vast majority of the 10000 new enterprises in 2021 are small workshop enterprises.
These small workshop enterprises are the main force of recycling. Wang Qi, chairman of Sichuan Qiyang automobile group, said that the data in 2018 showed that the total amount of retired power batteries in that year reached 74000 tons, but the first five “white list” recycling enterprises in the country recycled and treated only about 5000 tons of retired power batteries, and the rest went to informal recycling outlets. According to the feedback from the market side, only about 20% of the power batteries recovered by regular outlets at present. “This not only makes the formal recycling outlets built with great efforts useless, but also the power batteries flowing to informal recycling channels are easy to cause a series of problems and disrupt the normal development of the power battery recycling industry.” She said.
With the increasingly fierce competition, the phenomenon of “more monks and less monks” is becoming more and more prominent. Many enterprises have been in the embarrassing state of “not enough to eat” for a long time when they embark on the new production line. “At present, the capacity of China Shipbuilding Industry Group Power Co.Ltd(600482) battery recycling industry is 80gwh-90gwh, and the capacity under planning is nearly 100GWh. At present, the capacity utilization rate of most power battery recycling enterprises is very low.” Li Ming said.
Soochow Securities Co.Ltd(601555) it is estimated that there will be about 35% surplus in the capacity of the “white list” enterprises of the Ministry of industry and information technology in 2022. With the increase in the decommissioning of power batteries, the supply and demand of capacity is expected to reverse by 2025.
first harmless and then resource
Under the recycling boom, the resource attribute of waste power batteries is prominent, but its environmental protection attribute is intentionally or unintentionally ignored.
China Securities News reporter learned that there are three main technical paths for the recycling of waste power batteries: fire method, wet method and physical method.
Hydrometallurgy is the most mainstream technology path for China’s waste power battery recycling enterprises, but using this process to recycle waste power batteries requires low-temperature incineration in the early stage, which will produce air pollution; Acid and alkali need to be added in the later extraction process, which will produce hazardous waste.
“Power battery recycling is the ‘last mile’ of the new energy vehicle industry. First of all, it is an environmental protection industry. It is meaningful only to realize recycling on the basis of harmlessness. But now many people only regard it as a ‘gold mine’, especially many small workshops that lack environmental awareness and pollution treatment capacity have joined in one after another. In the state of disorderly competition, there is a great pressure on environmental protection.” Zhao Xiaoyong said.
Under the disorderly competition, the phenomenon of bad money expelling good money is becoming more and more prominent. “We can’t compete with some small workshops.” Wang Gang (a pseudonym), the relevant person in charge of a leading power battery recycling enterprise in Zhejiang, told the China Securities Journal, “they have no cost pressure such as environmental protection and have a larger profit margin than us, so they are willing to pay a higher price when recycling.”
In an interview with China Securities News, many insiders said that considering the environmental protection attribute of the power battery recycling industry, it is particularly urgent to promote its standardized development.
Wang Gang suggested that we should strengthen the binding force of policies and regulations and strictly implement the main responsibility. Countries and regions with more developed automobile industries such as Europe, America and Japan have formulated strict environmental regulations on battery recycling, requiring producers to fulfill the recycling responsibility, and take incentive measures to promote consumers to participate in recycling, forming a relatively perfect recycling system. China should actively promote the legislation of comprehensive utilization of power batteries and strengthen top-level design. The existing industry standards can not cover all aspects of battery recycling, and the research on industry systematic standards has not been carried out. So far, China has only issued more than 10 national standards and 14 industry standards, mainly focusing on the general requirements and technical specifications for echelon utilization and recycling. However, the standards for each segment still need to be improved, and there is an urgent need to speed up the construction of the standard system for the recycling of retired batteries.
In view of the hidden dangers existing in the flow of most retired power batteries to informal recycling outlets, Wang Qi suggested to further improve the power battery traceability mechanism, strengthen the standardized management of various outlets, and give power battery identification codes. At the same time, establish qualification standards for power battery recycling enterprises, and increase technical specifications and requirements for recycling and dismantling of new energy vehicles in combination with market development needs.
