High demand and rising raw material prices continued to push up the prices of iron phosphate and lithium iron phosphate. Affected by the high prosperity of the new energy vehicle industry, iron phosphate and lithium iron phosphate are still in a state of insufficient supply at this stage. In terms of raw materials, China’s phosphate rock continues to be in a tight supply situation, and the upstream Yellow Phosphorus faces great production restriction pressure under the background of double control of energy consumption and environmental protection policies, with high prices and strong cost support. The prices of lithium iron phosphate and iron phosphate have been rising since 2021. In 2021, the average market price of lithium iron phosphate reached 80000 yuan / ton, a year-on-year increase of 137%, and the average market price of iron phosphate reached 16000 yuan / ton, a year-on-year increase of 35%.
Lithium iron phosphate battery has regained its favor in the market, and the installed proportion has increased steadily. The unique olivine structure gives lithium iron phosphate excellent cycle performance and safety, and it has good thermal stability and less moisture absorption under full charge. In addition, with the new round of decline of the subsidy policy for new energy vehicles, cost reduction and efficiency increase have become the key. The advantages of lithium iron phosphate battery without rare metals and low cost have been highlighted. With the emergence of industrial applications of new technologies such as Byd Company Limited(002594) blade battery technology and Contemporary Amperex Technology Co.Limited(300750) CTP technology, the energy density of lithium iron phosphate battery has been improved and will regain its advantage in cost performance. Since 2021, the installed capacity and penetration rate of lithium iron phosphate batteries have increased significantly. In 2021, China Shipbuilding Industry Group Power Co.Ltd(600482) battery installed capacity was 154.5gwh, with a year-on-year increase of 143%; Among them, the installed capacity of lithium iron phosphate battery is 79.9gwh, accounting for 51.7% of the total installed capacity, with a year-on-year increase of 228%. The market scale is expected to continue to grow rapidly in the future.
In the medium and short term, the supply and demand pattern of iron phosphate and lithium iron phosphate will remain tight, and the high outlook of the industry is expected to continue. Due to the two wheel drive of policy and demand, the new energy vehicle industry is in a period of vigorous development. The substantial expansion of production of many power battery manufacturers has boosted the demand for iron phosphate and lithium iron phosphate. We predict that the demand for lithium iron phosphate and iron phosphate will be about 100.13/953700 tons in 2022 and 236.62/225.35 tons in 2025 respectively, and the demand will continue to improve. At present, many enterprises have issued plans for the expansion of iron phosphate and lithium iron phosphate, superimposing the cross-border layout of many phosphorus chemical and titanium dioxide enterprises. The total planned capacity of iron phosphate has reached 6.79 million tons / year. It is estimated that by 2025, the capacity of iron phosphate will reach 3.94 million tons / year. In the long run, the supply of iron phosphate and lithium iron phosphate will be surplus. However, due to the gradual tightening of the approval of energy assessment and safety assessment, as well as the problems of capacity climbing of new capacity, the supply and demand of iron phosphate and lithium iron phosphate will still be tight in the medium and short term.
Phosphorus chemical enterprises enter into iron phosphate and lithium iron phosphate, with significant advantages in resources, cost and integration. Phosphorus chemical enterprises with high-quality phosphate rock resources have stable upstream phosphate rock supply channels and can realize stable, low-cost and sufficient supply of phosphate rock. Under the background of the rising price of phosphorus raw materials, it has obvious resource advantages and cost advantages. At the same time, for the production enterprises with phosphorus chemical production line, with its integration advantages, it can not only reduce the capital expenditure required to increase the production of iron phosphate products to a certain extent, but also effectively deal with the by-products and wastes generated in the production process of iron phosphate, so as to meet the production demand of other phosphorus chemical products with low requirements for raw material purity, So as to improve the overall economic benefits of the enterprise. In addition, many phosphorus chemical enterprises have also signed cooperation agreements with downstream lithium iron phosphate or battery manufacturers, which makes the new capacity of iron phosphate and lithium iron phosphate bind downstream customers in advance and enhance industrial synergy.
Investment suggestion: under the strong demand of the new energy vehicle industry, the demand for phosphorus based new energy materials such as iron phosphate / lithium iron phosphate will increase significantly. At present, many phosphorus chemical enterprises have relevant capacity planning for phosphorus based new energy materials; The continuous extension to the field of new energy will make the traditional phosphorus chemical enterprises glow with new vitality. We recommend paying attention to Guizhou Chanhen Chemical Corporation(002895) , Hubei Xingfa Chemicals Group Co.Ltd(600141) , Yunnan Yuntianhua Co.Ltd(600096) , Chengdu Wintrue Holding Co.Ltd(002539) , Sichuan Development Lomon Co.Ltd(002312) , Xinyangfeng Agricultural Technology Co.Ltd(000902) .
Risk analysis: product and raw material price fluctuation risk, downstream demand less than expected risk, capacity project approval risk, environmental protection and safety production risk.
