Image source: Shanshan new material official website

[Research Report] Shanshan electrolyte business is expected to turn losses into profits this year

Shanshan new material currently has a production capacity of 40000 tons of electrolyte and 2000 tons of lithium hexafluorophosphate, including two production bases in Dongguan and Quzhou. Quzhou Shanshan is a cooperation project between the company and Juhua Co., Ltd. the two sides have started to build an integrated project with an annual output of 6000 tons of lithium hexafluorophosphate and 50000 tons of electrolyte since 2016. In terms of integration, in addition to self-produced hexafluoride and some upstream raw materials of hexafluoride, the company also has a capacity of 20000 tons of conventional solvents in Baotou, while developing and producing new additives to further reduce the cost of raw materials and improve the premium ability and comprehensive competitiveness of products.

Due to the continuous development of customers and the implementation of the price for quantity strategy, Shanshan electrolyte has entered a rapid growth period since 2018. In the first half of 2020, the sales volume of electrolyte was 6990 tons, a year-on-year decrease of 19%; It is estimated that about 14000 tons will be shipped in the first three quarters, and the annual electrolyte shipment in 2020 will be 21000-23000 tons, which is flat or slightly increased year-on-year.

In terms of industry status, Shanshan ranks fourth in terms of shipment volume, accounting for about 10% of the market in the first three quarters of 2020, and is in a leading position among second-line manufacturers; In 2019, the company surpassed Cathay Pacific Huarong in terms of shipments and entered the top three. The company has the potential to impact the first-line echelon.

Shanshan electrolyte customers mainly include second-line power battery manufacturers or consumer battery manufacturers such as Yiwei lithium energy, GuoXuan high tech, Funeng technology, Penghui energy, Zhuhai Guanyu, etc. Domestic second-line power battery enterprises have won the recognition of overseas OEMs. Funeng, Yiwei lithium energy, Xinwangda, GuoXuan high tech and others have been designated or directly invested by Volkswagen, Daimler, Hyundai Kia, Renault Nissan and BMW. Orders may be delivered in 2021. Ping An Securities believes that second tier enterprises have strong performance flexibility and explosive power, and are expected to contribute to Shanshan lithium battery materials.

From 2014 to 2019, Shanshan electrolyte revenue increased from 160million yuan to 570million yuan, with a compound growth rate of 29%. Since 2018, thanks to the company's efforts to strengthen the market development of the electrolyte sector and expand the channels of major customers of power batteries, the revenue of the electrolyte business has increased rapidly. However, due to the depreciation of old devices, impairment of accounts receivable, impairment of goodwill and other aspects, the electrolyte business is temporarily in a state of loss. In the first half of 2020, the loss per ton of electrolyte was about 1500 yuan. It is expected that the loss will continue to narrow or achieve profit and loss balance in the second half of the year, and turn losses into profits in 2021. (source: Ping An Securities)

[Research Report] lithium hexafluorophosphate showed a positive and stable growth trend

The industry should be cautious in expanding production, and the upward cycle of lithium hexafluorophosphate is by no means a flash in the pan. The current price of lithium hexafluorophosphate is about 140000 yuan / ton. After the Spring Festival, the equipment maintenance of some manufacturers is expected to accelerate the short-term upward trend.

Considering the impact of the price rise of upstream materials of lithium hexafluorophosphate and the improvement of capacity utilization, Capital Securities believes that the average cost of the industry this year will be 65000 yuan / ton, and the current profit margin is still within a reasonable range. Chemical products manufacturing has the advantage of scale. If the production capacity cost of small and medium-sized manufacturers is higher than that of the leader, and the price cannot be stabilized at more than 200000 yuan, it is unlikely to have a crazy expansion similar to that in 2016, and the pace of expansion is still controlled by the leader. Therefore, after 2022, the price will not repeat the sharp decline in 2017, but will continue to fluctuate within a reasonable range, showing a trend of profit stability and volume increase.

In addition, the thermal stability and conductivity of the new lithium salt lifsi are better than lithium hexafluorophosphate. With the improvement of the technical requirements for electrolyte with the promotion of high nickel, the addition ratio is expected to continue to increase in the future. It is expected that the market scale will reach 10billion yuan in 2025, and the CAGR will exceed 50%. Due to the high technical threshold and limited production capacity, the product currently enjoys a high premium. (source: Capital Securities)

[think tank circles] the profit space of electrolyte manufacturers is gradually expanding

Baichuan Yingfu data showed that after the price rise last week, the price of lithium iron phosphate electrolyte rose again. On the 22nd, the average market price rose to 46500 yuan / ton, an average increase of nearly 7%.

Huachuang Securities pointed out that at present, the pricing of electrolyte enterprises is mainly based on the supply of raw materials, but with the adjustment of electrolyte prices after the holiday and the improvement of self-sufficiency of leading enterprises, the profit space of electrolyte manufacturers is gradually expanding. Lithium power batteries will drive the demand of the electrolyte industry to rise. It is expected that the product price will continue to rise in 2021, and the electrolyte is expected to show a good pattern of rising volume and price in the next 1 to 2 years.

Article source:Battery net