The Price of This Chemical Is Rising

As of March 20, more than 10 listed companies with the concept of lithium batteries have disclosed their operations in the first two months of this year, and "both volume and price" has become a common feature.

Since the beginning of this year, the supply of lithium battery products has been in short supply and the price has continued to rise. Relevant enterprises have benefited from this, and their performance in the first two months of this year has increased significantly year-on-year. While the performance of lithium battery manufacturers has increased significantly, the production cost of the lithium battery industry chain is also increasing.

To this end, the Ministry of Industry and Information Technology, the Department of Raw Materials Industry and the First Department of Equipment Industry, together with the Price Department of the National Development and Reform Commission, and the Price Supervision and Inspection and Anti-Unfair Competition Bureau of the State Administration of Market Regulation, held a symposium a few days ago, requiring upstream and downstream enterprises in the lithium battery industry chain to strengthen supply and demand. A long-term and stable strategic cooperative relationship will jointly guide the rational return of lithium salt prices, increase efforts to ensure market supply, and better support the healthy development of strategic emerging industries such as new energy vehicles in China.

A number of industry insiders said that after two months of soaring prices, lithium carbonate prices have calmed down. With the increase in supply, prices may drop in the second quarter, and the rising market may usher in an inflection point.

Lithium battery concept stocks performed well in the first two months

The announcement disclosed by Yongxing Materials shows that from January to February 2022, the company achieved operating income of about 1.58 billion yuan, a year-on-year increase of about 96%; the net profit attributable to shareholders of the listed company was about 490 million yuan, a year-on-year increase of about 650%. .

"The company's performance has grown significantly, mainly due to the continuous rapid development of the lithium battery new energy industry, which has driven the price of lithium carbonate to continue to rise." Yongxing Materials said that in the first two months of this year, the company's lithium battery new energy business achieved operating income of about 620 million yuan Yuan, a year-on-year increase of about 670%; the net profit attributable to shareholders of the listed company was about 420 million yuan, a year-on-year increase of about 3700%.

The operating data of the "Lithium Industry Shuangxiong" in the first two months did not live up to expectations. According to the announcement of Ganfeng Lithium Industry, from January to February this year, the company achieved an operating income of about 3.6 billion yuan, a year-on-year increase of about 260%; the net profit attributable to shareholders of the listed company was about 1.4 billion yuan, a year-on-year increase of about 300%; The deducted non-net profit was about 1.8 billion yuan, a year-on-year increase of about 1,000%. According to the company, there are three main reasons for the substantial increase in performance. First, with the rapid development of the new energy vehicle and energy storage industry, downstream customers' demand for lithium products has grown strongly. In 2021, the company's lithium product production and sales will increase, and the average product sales price will increase significantly year-on-year; second, the company's lithium battery sector new projects have been put into operation one after another. , the production capacity was gradually released; thirdly, the gains from changes in fair value of financial assets such as Pilbara held by the company increased.

According to the data disclosed by Tianqi Lithium Industry, since 2022, affected by the significant increase in the demand and sales of downstream new energy vehicles, the price of the company's main lithium salt products has increased rapidly, and the product supply has been in short supply. From January to February this year, the company's lithium concentrate production increased by about 39% year-on-year, and sales increased by about 56% year-on-year. It is expected that the operating income of lithium concentrate will increase by about 366% year-on-year, and the operating income of lithium compounds and its derivatives is expected to increase by about 492% year-on-year. %.

On March 18, China Mining Resources announced that due to the release of new production capacity, the price of lithium salt products has risen, and the company's profitability has increased significantly year-on-year. According to the company's preliminary calculation, from January to February this year, the company achieved a net profit of about 486 million yuan, a year-on-year increase of about 1170.12%.

Judging from the profitability of the first two months, it is a foregone conclusion that the performance of lithium battery concept stocks rose sharply in the first quarter of this year. The continuous data on lithium salt profits tracked by Baichuan Yingfu through the cost-profit model shows that the profits of the lithium salt industry in the first quarter of this year continued to show an expanding trend compared with the fourth quarter of 2021.

Lithium carbonate prices double during the year

The soaring price of lithium salt has pushed up the cost pressure of the new energy vehicle industry. Since the beginning of this year, the price of lithium salt products has continued to rise. In particular, the price of lithium carbonate has risen from 250,000 CNY/ton at the beginning of the year to 500,000 CNY/ton.

On March 19, Li Xiang, CEO of Ideal Motors, said on his Weibo that at present, the brands that have signed contracts with battery manufacturers to determine the price increase of batteries in the second quarter basically announced price increases immediately. "For those who haven't raised prices, most of them have not yet negotiated the price increase rate, and they will increase the price immediately after the negotiation. The rate of increase in battery costs in the second quarter of this year will be very outrageous."

However, since March, the upward trend of lithium carbonate prices is slowing down. According to data from the Business Society, on March 18, the price of industrial-grade lithium carbonate was 475,400 CNY/ton, and the price of battery-grade lithium carbonate was 499,600 CNY/ton. At present, the downstream market is not very accepting of high-priced lithium carbonate products. In the state of sufficient inventory, the downstream market basically maintains a wait-and-see state, and the attitude of high-priced purchases tends to be cautious.

Recently, relevant departments have conducted interviews with some lithium salt enterprises, mainly to promote the reasonable and stable operation of prices, especially emphasizing that upstream enterprises should jointly promote the healthy development of the industrial chain.

Xin Guobin, vice minister of the Ministry of Industry and Information Technology, said not long ago that this year will focus on meeting production needs such as power batteries, moderately speed up the development of domestic resources such as lithium and nickel, and combat unfair competition such as hoarding and price gouging.

Qu Yinfei, a lithium carbonate analyst at Shanghai Ganglian New Energy Division, said that in terms of cost, the prices of spodumene and lepidolite remained on the rise. In terms of supply, the pre-maintenance enterprises have resumed production, and the supply has increased. It is expected that the supply in March will increase by 14.21% month-on-month compared with February. In terms of demand, downstream enterprises mostly produce according to plan, and their willingness to buy goods at high prices is reduced. Affected by sentiment, it is expected that the price of lithium carbonate is expected to stabilize in the second quarter, and may even decline.

Lithium salt prices rise or meet an inflection point

"Promoting the reasonable operation of lithium salt prices needs to be achieved by increasing supply." Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of North China University of Technology, said, "By increasing supply to regulate prices, there have been successful precedents in Jiangxi, Qinghai and other places. "

In Zhang Xiang's view, the rapid rise in the price of lithium carbonate is mainly due to the shortage of supply caused by the rapid development of the new energy vehicle market. In addition, the epidemic also had a great impact on the production and transportation of lithium carbonate, which further pushed up the price of lithium carbonate. However, there are many sources of lithium carbonate, and there are also abundant lithium ore resources in China. As companies increase supply, it is expected that lithium carbonate prices will gradually stabilize. "It won't go up again this year at least".

From the perspective of supply, there has been news that the production capacity of listed companies will continue to be released in the market. On March 18, Guoxuan Hi-Tech stated on the investor interaction platform that the company's lithium carbonate project was mass-produced in the first quarter of this year, and the production capacity has been gradually released. The production capacity is expected to be about 10,000 tons this year. Yongxing Materials also revealed that the first production line of the company's second-phase battery-grade lithium carbonate project with an annual output of 20,000 tons has entered the equipment commissioning stage, which can achieve the goal of putting into production 10,000 tons of lithium carbonate production capacity by the end of the first quarter.

Zhu Yuanzhi, a professor at the School of Mechanical and Materials Engineering at North China University of Technology, believes that the price of lithium carbonate has gradually stabilized due to factors such as government regulation and increased supply recently. But in the long run, lithium ore is a non-renewable resource, and the price of lithium carbonate will still be subject to supply and demand. Therefore, while adjusting the market price by increasing the supply, it is also necessary to find new sources of alternative battery materials and do a good job in recycling the existing materials.