How does the price of lithium battery fall?

Chengfei integration first loss in 10 years

On January 13, 2018, a paper announcement of Chengfei Integration(002190) provoked a thousand waves in the lithium market.

Chengfei integration refers to the fact that due to the sharp retreat of the National new energy vehicle subsidy, the vehicle factory passed the pressure of the reduction of subsidies to the power battery manufacturer and continued to reduce the price, resulting in the company's fourth quarter of 2017 lithium battery prices falling more than expected; The market for partial production of lithium batteries is tight, and the purchase cost has fallen less than expected; At the same time, as the price of lithium battery products dropped more than expected, the company's inventory price of lithium battery products was prepared to increase accordingly.

Affected by the above, the company's loss amount is expected to increase from the previous performance, so the performance forecast is revised.

Chengfei Integration estimates that the company's annual net profit range for 2017 is -102 million Yuan -- 62 million Yuan. Prior to this, Chengfei Integration had announced in the three quarterly reports that the annual performance was about -19 million yuan-5 million Yuan.

The lithium data noted that Chengfei was listed in 2007 and the net profit for that year was 35 million Yuan. Since then, it has slowly climbed, gradually climbing from 41 million Yuan, 42 million Yuan to 61 million Yuan and 68 million Yuan. By 2016, its net profit has reached 138 million Yuan. It can thus be seen that Chengfei's operating performance in 2017 fell into a loss, which is the first annual loss in 10 years.

Three mountain tops

A leaf knows the world autumn. Subsidy big landslide, downstream car factory price, upstream material price increase, three mountains under the pressure, power battery companies are getting worse.

First, look at the slope of subsidies. The subsidy policy for 2017, in terms of state subsidies, has fallen by 20 % compared with 2016, while the total subsidy is reduced by about 40 % based on the prescribed standards, because from the land supplement of ordinary regions, There was even a 60 percent reduction in land supplement as compared to 2016(for reference only, since the subsidy policy varies from place to place).

According to the latest news, Wuzhixin, deputy director of the China Automotive Technology Research Center, said in an interview recently that this year's subsidies for new energy vehicles will be cut again, and all subsidies will be abolished by the end of 2020. There will be another four-month extension this year for models eligible for subsidies in 2017. Several ministries, including the finance ministry and the ministry of industry and information technology, have agreed and submitted final proposals for approval, which are expected to be issued soon.

The next is the price of the downstream Depot. According to data from the starting point study(SPIR), the price of lithium iron phosphate batteries was approximately 2.60 Yuan/What the beginning of 2017; The price of a ternary battery is approximately 2.50 Yuan/Wh; By the end of 2017, the price of lithium iron phosphate batteries had dropped to about 1.55 Yuan/Wh, and the price of ternary batteries had dropped to about 1.45Yuan/Wh. The two major mainstream lithium batteries have both achieved a 40 % reduction in 2017.

The starting point study(SPIR) predicted that the price of lithium batteries would fall by another 10 to 15 percent in 2018. In other words, by the end of 2018, we will see that the price of lithium iron phosphate batteries will drop below 1.40 Yuan/Wh, and the price of ternary batteries will drop to 1.30 Yuan/Wh. This is a step closer to the 2020 price target of 1.00 Yuan/Wh for lithium batteries.

Finally, look at the raw materials market. In 2017, the raw material market continued to "rise", with "lithium" winning the world, "cobalt" being difficult to find, and "nickel" is rampant.

But the raw materials market is finally turning around in 2018.

Recently, a number of lithium-related listed companies issued an announcement to increase investment in the raw materials market. Between January 11 and January 17, within a short period of seven days, three listed companies have issued announcements related to lithium carbonate. They are, without exception, bullish on the market. In one way, the supply of raw materials will increase in the future.

Earlier news showed that the dispute between global lithium giant SQM and Corfo over mining rights at the Atacama salt mine had come to an end and the two sides had signed an agreement.

Market analysts believe that SQM's production quota at Atacama Salt Mine may more than double, and the resulting recovery in production may have a greater impact on lithium prices.

Eduardo Bitran, executive vice president of Corfo, said the deal would have a long-term impact on lithium supply and prices, but electric vehicles would continue to drive demand quotas. By 2025, SQM's annual production of lithium carbonate will increase from the current 66,000 tons to 216,000 tons; If additional investments are made and approved, production will increase further.

Analysts at Morgan Stanley said the QM's approval to boost lithium production would pose a significant downside risk to prices, which could fall faster than previously expected.

In the secondary market, Tianqi lithium industry and Lifeng lithium industry are affected by the large increase in lithium production, and share prices have dropped by nearly 20 % from their recent highs.

After rising prices for raw materials in 2016, lithium metal has finally signaled a reduction in prices.

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