The Production Capacity of This Chemical Product Exceeds 5 Million Tons!

After large-scale expansion, will lithium iron phosphate be overcapacity? The reporter's statistics found that the expansion scale announced by various manufacturers plus the existing production capacity has reached 5 million tons, which obviously exceeds the downstream demand in 2025. According to the normal expansion cycle, the surplus will appear next year, but due to factors such as energy consumption indicators and shortage of lithium resources, this time point may be delayed.

It is not that the competitors who enter the market cannot see the risks. Some production expansion announcements are suspected of being "hot spots", and there is uncertainty in the implementation of later production capacity. Traditional manufacturers and cross-border players have their own strengths. When the concentrated release of production capacity brings about a reshuffle, manufacturers who lack process technology and cost control capabilities will be the first to be eliminated.

Competition is not only happening between producers, lithium iron phosphate itself is also being hunted by a variety of materials. As the price rises, the cost-effective advantage of lithium iron phosphate gradually weakens, and the energy density is approaching the ceiling. Alternative solutions such as sodium-ion batteries and lithium manganate are "eyeing on", and the endless new technology routes are about to start a market battle.

5 million tons of huge production capacity hit

"If lithium iron phosphate manufacturers blindly ramp up production, then the day of production in the future will be the time of peak decline." Having worked in the phosphate field for 20 years, he has seen several cycles of ups and downs. Li Jigang, general manager of Tianjin Skoland Technology Co., Ltd. Sigh to reporters.

Over the past year, production expansion announcements have emerged one after another in the lithium iron phosphate industry. Not only old-fashioned manufacturers such as German Nano and Hunan Yuneng participated in the competition, but also cross-border players such as Longbai Group, CNNC Titanium Dioxide, and Xingfa Group from the titanium dioxide and phosphorus chemical industries. The expansion projects often cost 100,000 tons. metering. At the same time, the worry of overcapacity has gradually spread.

The reporter sorted out the recent expansion of lithium iron phosphate. There are nearly 40 large and small projects, and the total scale of expansion has reached 4.9 million tons. This scale is already equivalent to ten times the 470,000 tons of lithium iron phosphate shipments in China in 2021. If all of them are implemented, plus the existing production capacity, there will be a huge production capacity of more than 5 million tons. This is only incomplete statistics, the actual planning may be more.

Can 5 million tons of lithium iron phosphate be digested? The key is to see the growth space of the two major markets of power batteries and energy storage.

According to Gaogong Lithium’s forecast, the global penetration rate of new energy vehicles will reach more than 25% in 2025, which will drive the global power battery shipments to exceed 1,100GWh. The inflection point of the energy storage market will also accelerate, and it is expected that the global energy storage battery shipments will be Reaching 416GWh. Coupled with the demand for light vehicles, low-speed vehicles, heavy trucks, ships and other scenarios, the total global demand in 2025 is expected to reach 1800GWh.

Based on the experience of many industry insiders, a 1GWh battery needs to consume 2,500 tons of lithium iron phosphate. Based on this, it is estimated that the demand for lithium iron phosphate corresponding to 1,800GWh is 4.5 million tons. The above capacity planning has exceeded this figure. It should be noted that not all batteries will adopt the lithium iron phosphate route. After a year of counterattack in production and sales, iron lithium batteries were just on par with ternary batteries last year. This means that the demand of 4.5 million tons is extremely optimistic, while overcapacity is a high probability event.

"The transmission of supply chain information is asymmetric, which to some extent creates a false prosperity in the lithium iron phosphate market." Li Liang, deputy general manager of Gaodian (Shenzhen) Technology Co., Ltd., told reporters that the strong terminal demand led to excessive market sentiment Optimistic, in the face of the huge market cake, companies in the industry all want to seize the market position with the advantage of scale and eliminate marginal costs. In fact, customers such as car companies and energy storage will generally seek multiple suppliers after setting sales and installation targets, and the expansion of upstream suppliers will match their needs according to the upper limit, which will invisibly amplify the actual demand. Misleading upstream blind expansion.

This wave of production expansion began in the second half of 2020, when the domestic new energy vehicle market continued to heat up. The sudden outbreak of downstream demand traces the "vehicle-battery factory-material factory-resource end" layer by layer, catching suppliers by surprise. The price of lithium iron phosphate has soared, from less than 40,000 CNY/ton in early 2021 to over 140,000 CNY/ton today, an increase of 250%. The profits of manufacturers have also improved visible to the naked eye. The top two companies in the industry, Defang Nano and Hunan Yuneng, have gross profit margins of 22.47% and 24.75% in the first three quarters of 2021, much higher than the previous year's 10.18% and 16.18%.

Just before 2020, the lithium iron phosphate industry has just experienced a slump, and the domestic new energy vehicle market is not yet mature. The subsidy policy focuses on high energy density and long cruising range. Therefore, the market prefers ternary batteries to complete a round of capacity expansion. Lithium iron phosphate manufacturers suffered. Li Jigang recalled that in the past ten years, the capacity utilization rate of lithium iron phosphate was only 20% at the lowest, and the lowest price was 28,000 CNY/ton, with a gross profit of only about 1,000 yuan per ton.

The expansion cycle of lithium iron phosphate is not long, and the industry believes that it is generally 6-12 months. "Judging from last year's shipments, some of the new production capacity has already landed. Preparations will start at the end of 2020, and the production capacity should be ready by the end of last year. If it progresses smoothly, there will be excess risks in the second half of this year at the earliest." Li Jigang said .

Industry expansion is slower than expected

Judging from various planning figures alone, overcapacity has become the "grey rhinoceros" of the lithium iron phosphate industry, but when it will arrive, it is necessary to closely follow the progress of production capacity.

Longbai Group is the leader among the cross-border players of lithium-ion battery materials. The company announced on February 15 that the first phase of lithium iron phosphate with an annual output of 200,000 tons will be completed and put into trial production. The reporter came to visit the production base in Qinyang City. The project covers an area of more than 1,000 mu. The 4 large-scale workshops have been transformed on the original basis and have an annual output of 100,000 tons of lithium iron phosphate. There are currently 2 buildings. Equipped with basic equipment. The core equipment of the production line is 8 kiln systems with a length of 80 meters each, corresponding to a production capacity of 50,000 tons of lithium iron phosphate in the first phase.

According to the person in charge of the workshop, the production line completed the first feeding on New Year's Eve last year, and the first phase of 50,000 tons is currently in trial production, and it will be officially put into production after inspection and debugging at the end of this month. It can reach full sales in half a year, and now it is already sending samples to downstream customers, and the customer verification cycle is about 3-6 months, most of which are power battery manufacturers."

The reporter also learned that the iron phosphate project in Jiaozuo City is close to the titanium dioxide production line of Longbai Group, which can easily use by-products such as hydrogen peroxide, sodium hydroxide, and ferrous sulfate as raw materials.

More lithium iron phosphate expansion projects are progressing slower than expected. The reporter found out that most of the expansion projects are still in the preliminary planning and approval stage, and even some projects have only signed a framework agreement with the partner, and there is no actual progress.

For example, CNNC Titanium plans a 500,000-ton lithium iron phosphate project, which is the largest in the industry. According to the announcement plan, construction will start in the third quarter of 2021, and it will be put into operation in the second half of this year at the earliest. However, the reporter called the company to learn that the project has not yet started, mainly because of the slow progress in the environmental impact assessment and the acquisition of energy consumption indicators.

Phosphate fertilizer manufacturer Sultan announced a 100,000-ton iron phosphate and 50,000-ton lithium iron phosphate project in September last year. The company responded to reporters that the project had not yet been formally selected for a site and had no corresponding land, and the project was still in the early stage of equity transfer. 

"Some friends in the industry often report that the expansion plan is very big, but the local government will not approve such a large energy consumption index. This item is stuck, so the progress of production capacity will be lower than expected." A Phosphorus Chemical Industry Industry insiders told reporters that the production of one ton of iron phosphate (one of the main raw materials of lithium iron phosphate) consumes about 1,500 kWh, and one ton of lithium iron phosphate consumes 6,000 kWh.

A senior source of information disclosure told reporters that according to the regulations, as long as the two parties cooperate and sign an agreement, the listed company needs to fulfill the obligation of letter disclosure. At this time, the land may not be implemented, and the environmental impact assessment, energy assessment and other pre-approvals have not been done. As for when The ability to start construction belongs to the follow-up progress, and the uncertainty is still very large.

Even if the production line is completed, lithium resources are likely to become the bottleneck of production. The production of lithium iron phosphate mainly involves three resources: lithium, phosphorus and iron, of which the lithium source, which accounts for more than half of the cost, is the most scarce. The price of battery-grade lithium carbonate has risen dramatically in the past year, from 50,000 CNY/ton in early 2021 to a recent high of 470,000 CNY/ton. The global lithium ore resources are concentrated in Australia, South America and other places, and the production expansion cycle is long. The market generally expects that the price of lithium carbonate will remain high during the year.

Therefore, a situation that may arise is that various lithium iron phosphate production lines have been built, but not every manufacturer can obtain sufficient raw materials, the actual production capacity will be greatly reduced, and the corresponding lithium iron phosphate price will remain unchanged. 

This trend has already shown signs, and many companies have planned two materials, iron phosphate and lithium iron phosphate, at the same time when doing expansion projects, and the specific production plan can be moved between the two. The reporter learned that many companies plan to give priority to the production of iron phosphate in the first phase, and then extend to lithium iron phosphate depending on the lithium carbonate resources.

"However, although many manufacturers of iron phosphate are doing it, there are very few that can really do a good job, and the effective production capacity may not be that much." A person who has done quality control management in a battery factory told reporters that compared with lithium iron phosphate, Synthesis, the preparation of upstream iron phosphate is more difficult. From research and development to the actual use of batteries, it is impossible to run in for two years. The verification cycle in the battery factory alone will take a year.

Take the transformation path of the titanium dioxide enterprise Ananda (hereinafter referred to as the "company") as an example. The company started to make iron phosphate in 2013, and it was completed and put into operation in 2015. In the past two years, it has gradually expanded its production scale to supply the market in large quantities. "Considering the investment risk, we did not invest on a large scale at first, but only tried a small knife. Later, the technology gradually matured, and the cost advantage and the downstream market were superimposed, and it was gradually from the initial few thousand tons to the current 50,000 tons. , With the new round of expansion, the production capacity will be increased to 100,000 tons/year within this year." The relevant person in charge of Ananda told reporters.

Combining various factors, there is still a period of time before lithium iron phosphate is overcapacity. "If the announcement plan is followed, it can be clearly said that there will be excess in the second half of this year and the first half of next year at the latest. However, observing the current production progress in the industry, this time point may be delayed by 1-2 years, and there will be new additions this year. production capacity, but there will be no excess for the time being." said the above-mentioned source in the phosphorus chemical industry.

Mass testing cost control

When the production capacity is released in a concentrated manner, it will inevitably bring about a round of industry reshuffle. The TWh era has driven millions of tons of lithium iron phosphate, making this small material, which originally belonged to fine chemicals, gradually mass-produced. After product convergence, the core of competition will focus on production capacity and cost control.

Traditional manufacturers are in the top three of Hunan Yuneng, Defang Nano, and Hubei Wanrun, and they may go out of differentiation in the future. At present, the Hunan Yuneng expansion project has reached 770,000 tons, and the German nanometer expansion project is 620,000 tons; Hubei Wanrun is slightly behind, and the IPO fundraising project includes 50,000 tons of lithium iron phosphate production capacity.

Traditional manufacturers have gradually started from tens of thousands of tons to hundreds of thousands of tons. In contrast, cross-border players are more aggressive. There are not a few companies that plan to plan 200,000 tons or even 500,000 tons in one fell swoop. However, the reporter learned that cross-border manufacturers usually do not have the support of actual orders or intended customers when they formulate production expansion plans. 

Some capacity plans may be tainted with moisture. "The 'veteran' of lithium iron phosphate has a clear understanding of the development of the industry, and has a good run-in with suppliers and downstream customers. They all hold a large number of orders. As long as the financial strength is sufficient to support, the expansion of production is naturally unambiguous. I think the probability of production capacity landing is at least 80%." Li Liang said, but new players should maintain a rationality. I personally think that the final production capacity can reach 20% of the production rate is already very powerful.

"The scale of production expansion announced is large enough, and the government's support is sufficient, including resources, approval, industrial chain integration and other aspects. Now the game of many companies is to first plan a large-scale production capacity, and then build it in stages. The first phase of the project is basically a small test, and the follow-up will be adjusted according to the market situation." A senior lithium battery practitioner in South China said, but now many local governments are gradually returning to rationality, and the attracting objects are generally only for leading companies.

It is worth noting that some cross-border manufacturers do not have the corresponding technical team to produce lithium iron phosphate. An industry insider revealed to reporters: "Some manufacturers do not have talent reserves, and it is difficult to recruit externally. Most of the really outstanding talents are bound by equity, or they are given priority to go to the battery factory. So they went to the Chemical Design Institute to produce drawings and plans, and the Design Institute Then find a traditional phosphate material factory and seek specific technical support."

However, if they can overcome the difficulties in the early stage and achieve production capacity, cross-border manufacturers will exert their cost advantages on the resource side. Phosphorus chemical manufacturers can supply phosphate rock by themselves, and titanium dioxide manufacturers can use the by-product ferrous sulfate as an iron source.

For the time being, regardless of the impact of lithium resources, in the iron phosphate link, the cost advantage of phosphorus chemical companies is more prominent. Yu Tong, a battery material analyst at Shanghai Nonferrous Metals Network, told reporters that phosphoric acid accounts for 70% of the cost of iron phosphate, so it is the main factor affecting the price of iron phosphate. According to estimates, the cost of iron phosphate manufacturers without raw material advantages is 12,600 CNY/ton, the cost of manufacturers with iron source advantages is 11,800 CNY/ton, and the cost of manufacturers with phosphorus source advantages is 11,000 CNY/ton.

"The final competition is who can master the full set of technologies and combine phosphorus, iron, lithium and other resources to minimize production costs and maximize benefits." The above-mentioned South China lithium battery practitioner said.

Lithium Iron Phosphate Faces the Challenge

Lithium iron phosphate will shine in 2021 with its cost-effective advantage, but there are still many variables in whether it can continue to be accepted by the market. The vitality of this material itself is directly related to whether there is a demand for the production capacity to be built, and it also affects the prospects of manufacturers in the field.

The biggest competitor of lithium iron phosphate is the ternary with energy density advantage. In terms of cost, the two materials also need to use lithium resources, but the nickel and cobalt used in the ternary are more expensive than the phosphorus and iron of lithium iron phosphate, so the cost is higher. The latest market price of Xinyu lithium battery shows that the price of ternary batteries is 820 yuan/KWh, while the price of lithium iron phosphate is 690 yuan/KWh, which means that the cost of a 50-kWh car using the ternary solution will be 6,500 yuan higher. 

Driven by the domestic Tesla Model 3, Model Y, Wuling Hongguang MINI EV and other popular cars, the installed capacity of lithium iron phosphate batteries will surpass the ternary in 2021. According to the data of China Automotive Power Battery Industry Innovation Alliance, in 2021, the cumulative installed capacity of domestic power batteries will be 154.5GWh, of which the installed capacity of lithium iron phosphate batteries will be 79.8GWh, accounting for 51.7%, with a year-on-year growth rate of 227.4%, which is the growth rate of ternary batteries. 

However, the main cost-effective lithium iron phosphate cannot withstand long-term price increases. Li Jigang said that under the current price of lithium iron phosphate, the acceptance of the power battery market is in a critical state. The downstream is willing to temporarily sacrifice profits in order to compete for market share. The current price of energy storage lithium batteries has no future, and in the consumer electronics market, "many Manufacturers have stopped production one after another since October last year, and they are quitting."

An insider of a battery material factory in North China told reporters that in 2022, with the development of nickel in Indonesia

The mines are gradually producing output, the cobalt mines in Africa are gradually recovering, the prices of nickel and cobalt will gradually return, and the price competitiveness of high-nickel ternary materials will gradually be reflected.

In terms of energy density, technologies such as BYD's blade battery and CATL's CTP (Cell to Pack) have optimized the battery structure and removed the modules and other links to improve the volume utilization rate of the battery pack. However, from the performance of the material itself, Li Jigang believes that the energy density of lithium iron phosphate is close to the ceiling, and there is not much room for improvement. Under the pursuit of cruising range and intelligent functions of electric vehicles, lithium iron phosphate may not be able to do it.

When the ceiling of lithium iron phosphate appears, the cost-effective advantage is no longer, and other technical routes will usher in opportunities. Li Liang said that at present, lithium manganate batteries are slowly being favored by the industry. It takes 0.22 tons of lithium carbonate to prepare one ton of lithium manganate, which is 0.03 tons less than that of lithium iron phosphate. With the current price of lithium carbonate as high as 470,000 CNY/ton, the cost of this item alone can be reduced by 14,000 yuan, which is currently the most expensive. Lithium manganate is only 90,000 yuan per ton; in addition, lithium manganate has basically solved the problem of manganese dissolution, and has been greatly improved in terms of life, platform voltage, and energy density. It has a higher level than lithium iron phosphate. strength below.

In the field of energy storage, lithium iron phosphate will usher in a head-to-head battle with sodium-ion batteries. Sodium-ion batteries have cost advantages due to their abundance of resources, and have better low temperature and fast charging performance, which can adapt to alpine regions. CATL released its first sodium-ion battery in July last year, and said that the energy density of the battery cell can reach 160Wh/kg, which is close to the lithium iron phosphate battery. The energy density of next-generation sodium batteries can reach 200Wh/kg.

At present, sodium-ion batteries have not yet been industrialized, but many industry insiders said that the current abnormally high lithium price will stimulate the acceleration of the replacement process of sodium batteries. Large-scale commercial use is no longer far away. CATL plans to put into operation a sodium-ion battery production line in 2022, and basically complete the industrial chain in 2023.

At the same time, lithium iron phosphate is also realizing self-innovation through material technology. One of the upgrade directions includes lithium iron manganese phosphate. Li Jigang introduced that compared with lithium iron phosphate, lithium iron manganese phosphate has increased energy density by 20%, and the overall cost has decreased by 10%. At present, it has gradually increased in small electric fields such as two-wheeled electric vehicles; The energy density is increased by 30% after the composite of 30% ternary material of manganese iron lithium has been applied to passenger cars in small batches. Ningde era added other metals on the basis of lithium iron manganese phosphate. The company disclosed in recent investor exchanges that the new product M3P is about to be launched, which is called "the ternary of phosphate series", and the cost is lower than that of ternary.