The net profit of Xinzhou State fell by 23 %, and the electrolyte industry became more competitive

Recently, Xinzubang released its first quarter report and realized revenue of 450 million yuan, a year-on-year increase of 16 %; The net profit of returning mothers was 52 million yuan, a decrease of 23 % year-on-year. Xinzubang explained in the quarterly report why the company's performance has declined: First, the lithium ion battery electrolyte has suffered a significant decline in gross profit due to the decline in the price of competitive products; Due to the appreciation of the RMB against the US dollar, there was a large exchange loss during the reporting period.

In fact, electrolytes have always been the most competitive of the four core materials for lithium batteries. Although the sales of electrolytes of lithium-ion batteries have increased, due to the strong support of the state for the new energy automotive industry in recent years, some domestic lithium-ion battery electrolytes have expanded their production capacity and the market competition pressure has increased.

It is understood that the price of 2.2 Ah ternary cylindrical electrolytes was 45,000 yuan per ton in the quarter, compared with 67,000 yuan per ton in the same period last year, a year-on-year decrease of 13.27 %; The price of lithium iron phosphate electrolytes was 42,500 yuan per ton in the quarter, compared with 82,500 yuan per ton in the same period last year, a year-on-year decrease of 48.48 %; At the same time, lithium hexafluorophosphate, the raw material of the upper reaches of electrolytes, was affected by the release of production capacity. The price for the quarter was 130,000 yuan per ton, compared with 395,000 yuan per ton in the same period last year, a year-on-year decrease of 67.09 %. The overall price pressure in the electrolyte industry was relatively large. The company's electrolyte product gross profit decreased.

Judging from the supply price of Xinzhoubang's cooperation with downstream battery plants, the price of electrolytic fluid fell significantly in the first quarter, corporate profits were thinned, and price war became the focus of competition for electrolytic fluid companies.

In fact, Xinzhou State is one of the leading companies in lithium battery electrolytes in China. In 2017, it achieved an operating income of 1.816 billion yuan, an increase of 14.25 % year-on-year, and a net profit of return mother of 280 million yuan, an increase of 9.4 % year-on-year. In terms of electrolyte sales and sales volume, the company ranks second in the industry, second only to Tianci materials.

The lithium battery electrolyte is mainly composed of solute(lithium salt such as lithium hexafluorophosphate), solvents and additives, of which lithium hexafluorophosphate(abbreviated as hexafluoride) accounts for half of the total cost of the electrolyte and is the core factor that determines the price of the electrolyte.

The price of hexafluoride in 2016 and 2017, due to supply and demand factors, has experienced a dramatic spike and collapse: prices were close to 400,000 yuan/ton in early 2017, and only one year later, in early 2018, prices fell by 70 % to less than 130,000 yuan/ton. As a direct result, the price of electrolytes fell from 80,000 tonnes to 40,000 tonnes in the first quarter of 2017, a decline of more than 50 percent year-on-year, and the profits of the enterprises concerned were significantly affected.

At the same time, overcapacity has also exacerbated the price war in the electrolyte industry. In 2017, the total output of electrolytes in China for the whole year was only 110,000 tons, and the newly expanded capacity of Tianci Materials is only twice its size. Overcapacity cannot be avoided in the future, and the degree of fierce competition can be seen.

Comments: With the release of production capacity, the price war in the electrolyte industry will be inevitable, and the leading battle between Xinzhoubang and Tianci materials will also be staged. Xinzhou State, as an old electrolytic liquid company, will be overtaken by the rising show of Tianci materials. The key point is that the seven inches of lithium hexafluorophosphate was captured by the godsend material. Whether the new Zeus State has a future move will wait and see.

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