Lithium iron phosphate material: price increase is imminent

What is the current production status of the lithium battery materials industry?

Since August, the production situation of the lithium battery materials industry has continued to improve. The data shows that the output has increased by about 10% month-on-month, and leading mainstream enterprises have reached full capacity. Although the capacity utilization rate of some enterprises is not 100%, on the whole, the operating rate of the industry is high, and even the operating rate of some small and medium-sized enterprises may be higher. However, the actual capacity utilization rate may be higher than the reported data, around 60%, and it is expected to further increase to about 63-65 in November. 

Is there any structural change in the lithium battery materials industry at present? 

Is there any structural change in the lithium battery materials industry now? At present, the lithium battery materials industry as a whole has not undergone major structural changes. Top companies are expected to perform better in December, with overall sales possibly maintaining a month on month balance or growth trend. Among them, the sales of high-end products such as high voltage and high density are expected to remain stable or even increase, while the sales of second-generation and third-generation products in the middle and low end may be lowered. 

Is there any structural change in the lithium battery materials industry at present?

At present, the lithium battery materials industry as a whole has not undergone major structural changes. Top companies are expected to perform better in December, with overall sales possibly maintaining a month-on-month balance or growth trend. Among them, the sales of high-end products such as high voltage and high density are expected to remain stable or even increase, while the sales of second-generation and third-generation products in the middle and low end may be lowered. Has the pricing model of the lithium battery materials industry changed? At present, the pricing mode of lithium battery materials industry has not changed fundamentally, and the method of multiplying the coefficient by a certain multiple plus the price of iron phosphate and packaging and processing fees is still adopted. However, the degree of order negotiation between different companies is different. When signing new orders this year, buyers and sellers are more cautious about discussing discounts, and they are no longer willing to offer big discounts as easily as in the past. At the same time, in terms of processing fees, mainstream prices remains relatively stable, while in the field of high-end product, sellers will try their best to strive for higher profit margins because of higher costs. Because of the high cost of high-end products, even the upward pricing is relatively limited. In addition, key discussions regarding price negotiations for next year or the next half year are expected to take place from the end of this month to the beginning of next month. 

Do material companies currently have a willingness to increase prices and what is the expected increase?

At present, material enterprises are willing to raise prices, especially considering that the current market price is low, and it is necessary to raise prices to improve their operating conditions. It is understood that BYD can accept a greater price increase, but the price increase range needs to be determined through negotiations. At present, the industry demand is to achieve a state of not losing money. 

How much is the total demand expected to grow next year?

It is estimated that the overall demand will increase by about 20% next year, and the demand expectations of leading companies in the market also indicate that the demand is strong and it is expected to support the turnaround in the second half of the year.

Are other materials also going up in price?

From the scarcity point of view, some materials such as lithium hexafluorophosphate have begun to have the desire to increase price. Not only did they experience price increases in February, March and June this year, but also some small and medium-sized enterprises, because of their small scale, are more susceptible to market price fluctuations and may clear their positions first, thus pushing up the prices of the whole industrial chain. 

How to treat the current prices and future trends of lithium?

At present, the price of lithium is at a high level and the processing fee has stabilized, but the subsequent supply and demand situation will determine the price trend. The pessimistic expectation of lithium prices in the first half of next year may lead to supply contraction. If prices continues to rise above 80000, supply will increase, and there may be an inventory surplus in the whole market next year.