According to the Daily Economic News, due to market demand is too strong, China’s many power battery manufacturing enterprises orders “burst up”. China Association of Automobile Manufacturers’ data shows that in December 2020, China’s power battery sales totaled 12.2GWh, up 56.9% year-on-year. Among them, ternary battery sales of 6.5GWh, up 9.3% year-on-year, accounting for 53.2% of total power battery sales; lithium iron phosphate battery sales of 5.6GWh, up 244.2% year-on-year, accounting for 45.8% of total power battery sales.
Driven by strong market demand, the prices of raw materials for power batteries, including lithium salt, electrolytic cobalt and copper foil, also continued to rise. Many upstream cathode material companies are stepping up production scheduling and expanding production capacity. According to SMM data, 10 upstream cathode material enterprises will expand their production capacity in 2020, and a total of 585,000 tons of high nickel ternary cathode materials and lithium-ion battery cathode materials are expected to be expanded.
As the domestic new energy vehicle market recovers and strengthens, the power battery industry chain, which is closely related to new energy vehicles, is rapidly warming up, and the installed capacity is rising. According to the China Automotive Power Battery Industry Innovation Alliance data, in 2020, China’s power battery installation accumulated 63.6GWh, an increase of 2.3%.
Thanks to the strong market demand, the prices of raw materials for power batteries, including lithium salt, electrolytic cobalt and copper foil, have also continued to rise. According to SMM data, as of January 18, the average price of electrolytic cobalt was 299,500 yuan per ton, up 26.1% from the lowest level since the beginning of 2020; the average price of battery-grade lithium carbonate was 63,000 yuan per ton, up 58.49% from the lowest level since the beginning of 2020; the average price of lithium hydroxide was 48,200 yuan per ton, up 14.88% from the lowest level since the beginning of 2020.
It is worth mentioning that even if the prices become “crazy” in China, but some raw materials companies still appear to be in short supply. Industry leader Ganfeng Lithium (002460.SZ) said in an interactive exchange with investors, the company’s lithium hydroxide design capacity of 81,000 tons/year, lithium carbonate design capacity of 40,500 tons/year. However, in terms of supply, the company currently has a tight supply of lithium products, especially in January and February by the Spring Festival holiday, the product supply exceeds demand. The company expects that all lithium salt products will be in a tight supply this year.
“Driven by new energy vehicles and 3C consumer electronics, the future growth rate of lithium demand will remain above 20%, and if we consider the industry chain’s own demand for replenishment, there will be an oversupply situation in 2021.” Zhongtai Securities said.