With the rapid development of the new energy vehicle industry, the price of lithium, the most important raw material for the production of its power battery, has increased by more than 400% in the past year. While lithium salt prices continue to set new record highs, midstream battery manufacturers and downstream new energy vehicle manufacturers have also successively increased product prices.
So, when will the lithium price rise continue? What impact will the price increase have on the upstream, middle and downstream of the industry? What is the transmission of lithium carbonate price rise? Which sectors will still have investment value?
lithium carbonate prices continued to hit a record high
According to the data provided by the business agency, the reference price of lithium carbonate continued to rise in the past year. As of January 14 this year, it closed at 314600 yuan / ton, an increase of 426.9% compared with the same period last year.
In an interview with the Securities Daily, he Li, general manager of zhizhishan investment, said that the main reason for the continuous rise in the price of lithium carbonate since last year was that, from the perspective of supply, a large number of lithium mining enterprises had fallen below the cost line at the low price and were forced to close down, and the fastest production expansion cycle of lithium mining was 2 years, some even 3-5 years. From the perspective of demand, the sales of new energy vehicles continued to exceed expectations in 2021, and the demand for power batteries also increased significantly. The limited supply of lithium carbonate leads to tight inventory and explosive growth of demand. This serious mismatch between supply and demand makes the price of lithium carbonate soar.
According to He Li’s prediction, the lithium carbonate market will continue to maintain a tight balance in 2022, and the price rise may last for some time. A large number of new supply is expected to be released in the fourth quarter of 2022. If the sales of new energy vehicles continue to exceed expectations, the price rise of lithium carbonate may be alleviated.
As for the sales expectation of new energy vehicles, Liu Cunxin, assistant fund manager of private placement network, added that as of December 2021, the sales penetration rate of Shanxi Guoxin Energy Corporation Limited(600617) vehicles had reached 22%. According to the prediction of the passenger Association, it is still expected to maintain a good growth rate in 2022, with an opportunity to reach 25%.
battery manufacturers are not afraid of rising prices and running out of stock
It is understood that in December 2021, major new energy vehicle head battery suppliers, such as Contemporary Amperex Technology Co.Limited(300750) , Byd Company Limited(002594) , have announced that the battery cost will rise by 20% in 2022, and the price rise is doomed.
Qi Haizhen, President of Beijing Teyi sunshine new energy, said in an interview with the Securities Daily that from the perspective of price transmission, due to the continuous expansion of the new energy vehicle industry, the price rise of lithium battery raw materials is easier to be transmitted to the downstream. For lithium battery manufacturers, it is good to get the goods and ensure the stable supply of raw materials. Therefore, although the lithium battery industry does not have to worry too much about the rise of lithium salt price, it is more worried about the market competition in the industry. If some manufacturers do not have stable supply and cost price, It is easy to lose the trust of downstream customers due to the dilemma of “waiting for rice to cook”. If the production capacity is limited due to the high price of raw materials, it is likely to face the forced exit under the vicious circle. Therefore, in the next one, two or several years, the price transmission capacity, stable supply capacity and technical process upgrading capacity of battery manufacturers will be more tested.
“However, the rising prices of lithium ore, lithium salt and battery are a direct benefit to the battery recycling industry. After all, on the premise of limited resources, the effective and advanced recycling value will gradually appear, which is not only conducive to the sustainable development of the industry, but also has a stronger sense of security of lithium resources.” Qi added.
the price increase of automobile manufacturers only increases the best-selling models
In conclusion, it can be seen that the rise of lithium salt price has a direct positive impact on the upstream raw material enterprises and a weak impact on the midstream lithium battery enterprises. As the terminal industry downstream of lithium battery, the price transmission of new energy vehicle industry has attracted the attention of investors and consumers.
According to Zhang Xiang, a researcher at the automotive industry innovation research center of Northern University of technology, although the price of power batteries continues to rise, car prices are still relatively few. This is mainly because new energy vehicles are in a state of overcapacity. If the price of car enterprises increases, their product competitiveness will decline, resulting in a decline in sales. At present, the prices of most auto enterprises have not increased, that is, only a few of the best-selling models of auto enterprises have chosen to increase the prices.
“For example, Tesla‘s Model3 has increased by about 10000, modely has increased by 20000, Volkswagen’s ID series has increased by more than 5000 yuan on average, GAC’s ai’an has increased by more than 4000 yuan, and the models with increased prices are more popular. Like other models, including Weilai, ideal and Xiaopeng, they have not chosen to increase prices.” Zhang Xiang said.
For the investment value analysis of the upstream and downstream of the lithium salt industry chain in the future, he Li believes that most of the profits of this round of lithium carbonate price increase are shared by resource-based enterprises such as upstream lithium mines and salt lakes. Many midstream lithium salt processing enterprises are pricing models of cost + processing fee, and will share a small part of the rising income. From the perspective of investment, the core is that resources are the king. The cost of enterprises with resources is relatively fixed and the performance flexibility is huge. Resource enterprises with core lithium mines and salt lakes will be more worthy of expectation. From the perspective of valuation, although the price of lithium carbonate has been rising, the share prices of many related enterprises have been falling. Some leading enterprises with high-quality resources and growth have a certain cost performance.
Liu Cunxin believes that the whole downstream of the lithium battery sector is sharing the pressure of lithium price rise. Recently, it can also be seen that some terminal automobile manufacturers begin to raise prices, but the rise of lithium price will not significantly reduce the sales of new energy vehicles. Firstly, the current strategy of automobile enterprises is to occupy the market and profit is secondary. Secondly, for electric vehicles with more than 200000, the rise of lithium price can be easily accepted, Therefore, we are still optimistic about the sustained high prosperity of the upstream and downstream sectors of lithium battery in the future.
