In 2024, the lithium battery industry will continue its downward trend.

Despite relatively stable upstream raw material prices and improved terminal sales, the prices of the four major lithium battery main materials in the first quarter further declined.

For the imbalanced pattern of oversupply in China, there is no strong signal of improvement yet, and the profits of midstream lithium battery companies have hit bottom. It is urgent to find a determined new market increment.

Q1 material prices further decreased, and profits bottomed out

In the first quarter of 2024, the prices of materials in the midstream of lithium batteries further decreased, with some falling to freezing points.

In terms of iron lithium positive electrodes, while the price of raw material lithium carbonate remained relatively stable in the bottom range of 90000 yuan, the processing cost further decreased by 2-3k.

Market data shows that in Q1 2023, when this downward cycle begins, the processing cost of lithium iron can only be maintained in the range of 8-9k yuan/ton. By Q1 2024, it has dropped to 4-5k yuan, and currently it has fallen below the processing cost of 6-8k yuan/ton for lithium iron manufacturers. Affected by this, the price quotation for iron lithium cathode materials this week is about 42000 yuan/ton, with a weekly decrease of about 500 yuan/ton.

In terms of ternary positive electrodes, the industry expects a relatively small decrease in production capacity utilization in 2024, corresponding to a stable decrease in processing costs of 1-3k yuan/ton.

In the negative electrode stage, the Q1 bidding price showed a slight decrease of 0.15-0.2 million yuan, with the mainstream petroleum coke secondary particle product bidding price dropping to 14000 yuan/ton; The quotation for the graphitization box furnace is 7000-8000 yuan/ton, touching the cost line.

However, the high priced negative electrode inventory in the industry has gradually been digested, and the downward pressure on finance will be eliminated accordingly. As pointed out by Putai, the high priced inventory has been digested to the remaining 30000 to 50000 tons, and there is no risk of impairment; With the integration of production capacity and the expansion of cost advantages through new processes, overseas orders are clear, and unit profits are expected to improve quarter by quarter in the next 24 years.

The latest bidding price for the diaphragm section shows that in Q1 2024, the month on month price of dry process diaphragms will decrease by 5% -10% to 0.45-0.5 yuan/square meter, while the price of wet process diaphragms will decrease by more than 10%. As the new production capacity enters the climbing stage in 2023, the market competition pressure will further expand this year, and there is still room for price reduction in the future.

In the electrolyte process, at a price of 100000 yuan for lithium carbonate, the quoted price for lithium hexafluorophosphate in Q1 of 2024 is about 75000 yuan/ton, corresponding to processing fees of 15000 to 18000 yuan/ton. The current price level has dropped to the cash cost of some manufacturers.

Overall, the current prices have further declined, and most material companies have hit bottom profits. Mainly related to the pre replenishment and post holiday overdraft needs during the Spring Festival period. In fact, downstream reserve procurement remained cold after the holiday, and lithium carbonate inventory entered a high position of 80000 tons, putting great pressure on the industry as a whole to reduce inventory.

According to industry insiders in the materials industry, there is currently insufficient certainty in downstream orders and high prices in the upstream lithium carbonate market, so material factories do not have urgent procurement needs.

Recently, lithium and nickel miners have released concentrated production reduction signals, causing short-term market sentiment to be disturbed, with both lithium and nickel prices showing a slight rebound; On the demand side, another wave of new energy vehicle price reductions by OEMs may drive a recovery in demand for batteries and materials, but the actual effects still need to be verified.

The "new opportunities" in front of us

Under the deadlock, lithium battery material companies are constantly seeking new growth opportunities.

For battery companies, improving the production efficiency of the four main materials and reducing prices to drive down battery production costs are inevitable pursuits and trends. For material companies, the decrease in production costs does not directly lead to price reductions. The price of materials ultimately depends on the balance between supply and demand.

In the "old" pattern, the competitive pressure of supply exceeding demand is still present. The supply side lithium price of 90000 yuan has not yet fallen below the cost line of most lithium enterprises, while the demand side battery cell price is at risk of falling into the 0.3 yuan/Wh range in a round of new energy vehicle price wars. The cash cost of battery enterprises is constantly being challenged.

In this context. The material aspect needs to focus on new battery systems such as fast charging batteries, large cylindrical batteries, and overseas markets such as Europe and North America, which are currently experiencing new demands on the eve of the outbreak.

For positive electrode enterprises, under the pricing model of "raw material cost+processing fee", it is urgent to obtain technology premiums through product differentiation, product iteration, and improving product research and development capabilities.

Since the beginning of 2024, the new battery products have officially entered the mass production stage, marked by the large-scale installation of Ningde Times Lithium Iron Phosphate Fast Charging Shenxing Battery on the Chery Star Era ET model, and the mass production of Yiwei Lithium Energy's large cylindrical battery equipped with Jianghuai Ruifeng RF8.

Based on this, the shipment of fast charging ternary materials and nano LFP materials that can meet the demand for fast charging cells is expected to be further improved. Rongbai Technology plans to further launch mature fast charging ternary materials in the first half of 2024. GGII data also indicates that the shipment volume of fast charging ternary materials is expected to exceed 8000 tons in 2024.

Furthermore, due to the widespread application of the high energy density combination of "high nickel ternary+silicon-based negative electrode" in the development of large cylindrical batteries in China, the volume of large cylindrical batteries will also bring development growth to the above materials.

Among them, the proportion of high nickel ternary materials in the shipment of ternary materials is expected to exceed 50%; Positive electrode manufacturers are also accelerating the development of ultra-high nickel ternary materials, with Rongbai Technology supplying ultra-high nickel ternary positive electrodes to NIO 360Wh/kg semi-solid batteries as a landmark event. Other companies such as Zhenhua New Materials and Xiamen Tungsten New Energy are gradually increasing their shipments of 9-series ternary materials.

Since 2024, material companies have also made breakthroughs in technology and industrial layout in the field of silicon-based negative electrodes. Technically, new patents for silicon-based negative electrodes are emerging one after another, with over 140 patent applications for silicon-based negative electrodes in February.

In terms of industrialization, the leading enterprises have a significant increase in the quantity of silicon-based negative electrodes. Shanshan Group's second-generation silicon oxygen negative electrodes, Putai Lai's new generation silicon carbon and silicon oxygen products have the ability to supply in bulk, and Xiangfenghua's silicon carbon negative electrode materials have also entered the customer testing stage. GGII pointed out that by 2025, domestic shipments of silicon-based negative electrode materials are expected to exceed 60000 tons, allowing related enterprises to increase profits.

The incremental opening of the diaphragm process also relies mainly on high-end products. In the semi-solid field, Xingyuan Material has already supplied semi-solid battery separators to multiple overseas customers; Enjie Group has achieved multiple 7 μ M and 9 μ The mass production and introduction of a new type of high porosity and high-strength diaphragm for m.

In addition, the increase in the proportion of coating shipments will also offset the impact of the decrease in diaphragm bidding prices. Some leading manufacturers have expressed the hope of maintaining a unit profit of around 0.4 yuan/square meter through this.

From the perspective of production capacity, in the context of relatively mild oversupply, the expansion of new production capacity in the electrolyte industry has shifted towards high-performance electrolytes, such as the China Electric Power 2 billion yuan high-end electrolyte project and the Zhongxin Fluorine Materials new electrolyte material project.

It is worth noting that due to factors such as long-term pricing and threshold barriers, the profitability of overseas lithium battery materials is higher than that of domestic ones; The overseas lithium battery industry chain is relatively prosperous, and the supply gap has brought opportunities for the domestic materials industry chain.

Taking positive electrode enterprises as an example, overseas market processing costs are higher and more stable. In 2024, Rongbai Technology, which has gradually increased production in Korean factories, and Dangsheng Technology, which accounts for over 70% of overseas sales, will both increase their profitability as their overseas layout accelerates.