Power battery: low-end overcapacity upstream hard to survive
Up to now, more than 20 listed companies in the power battery industry chain have disclosed half-year financial reports or forecasts, of which nearly 64% of enterprises have suffered losses, while the profits of the head enterprises have nearly doubled year-on-year.
Data show that in the first half of this year, the national lithium battery production exceeded 400GWh, an increase of more than 43%, the first half of the lithium battery industry revenue reached 600 billion yuan. "In the first half of the year, the industry output has increased significantly, while most enterprises are still losing money, which indicates that the industry resources are further concentrated in the head of enterprises, and also indicates that a new round of industry elimination triggered by the low-end overcapacity is coming." China Market Society (automotive) marketing expert committee secretary-general Xue Xu told reporters.
The performance forecast released by Guoxuan High-tech shows that the operating income in the first half of this year is about 14 billion to 16 billion yuan, and the net profit attributable to shareholders of listed companies is 150 million to 200 million yuan, an increase of 132.27% to 209.69%; In the first half of this year, the operating income of Ningde Times reached 189.2 billion yuan, an increase of 67.52%. Net profit of 20.717 billion yuan, an increase of 153.64%. In the second quarter of this year, the company's net profit was about 10.9 billion yuan, which is second only to the 13.1 billion yuan in the fourth quarter of last year. In the first half of this year, the battery production of Ningde era reached 154GWh, an increase of 23%. At the same time, its battery capacity reached 254GWh, an increase of 65% year-on-year.
In the context of digesting higher cost raw materials and superimposed downstream demand reduction, the life of upstream enterprises in the battery industry chain is generally difficult. For example, lithium iron phosphate battery cathode material companies De Fang Nano, Fengyuan shares in the first half of the loss. Among them, the net profit loss attributable to shareholders of listed companies in the first half of this year is expected to be 1.04 billion to 1.17 billion yuan, and the profit of 1.28 billion yuan in the same period last year, from profit to loss, down 181.25% to 191.4%.
The first-half performance of lithium battery material companies such as Fengyuan Shares, Tianqi Shares, and Jiangte Electric is basically similar. Among them, in the first half of this year, the net profit of Fengyuan shares is expected to lose 93 million to 123 million yuan, down 198.5% to 230.27%. In addition to the above reasons, Fengyuan shares also have losses caused by a substantial increase in the investment cost of new projects. Fengyuan shares are still adding lithium iron phosphate cathode materials, while extending to upstream materials, hoping to reduce production costs.
Fan Yongjun, secretary-general of the Chengdu New energy Automobile Industry Promotion and Application Promotion Association, analyzed to reporters that the price of lithium materials in the past two years has soared, once reaching more than 600,000 yuan per ton of battery-grade lithium carbonate last year, and this year has fallen to less than 300,000 yuan per ton. However, last year, because some lithium material companies worried that the price continued to rise, they stored quite a lot of raw materials, and after the lithium material market price fell, the stored materials were still being digested in the first half of this year, and the cost was bound to be high and lead to losses. It is worth noting that in the past two years, against the backdrop of rising prices of lithium materials, some power battery companies have taken the initiative to acquire lithium mines globally to avoid being "jammed" in the material supply chain, which has led to a decline in demand for lithium materials to a certain extent.
Looking forward to the second half of the year, the operating performance of materials companies will gradually improve. "The situation of German Nano and other companies is representative of power battery material companies." Lin Shuwen, a researcher at the East China Automotive New Material Technology Research Institute, told reporters that on the one hand, the increase in the loading of lithium iron phosphate batteries attracts material companies to expand the layout. In the first half of this year, the cumulative load of lithium iron phosphate batteries was 103.9GWh, accounting for 68.3% of the total load, an increase of 61.5%. The cumulative load of ternary batteries was 48GWh, accounting for 31.5% of the total load, with a cumulative increase of 5.2%. With the continuous growth of lithium iron phosphate battery load, and lithium manganese iron phosphate battery into the market, the second half of the relevant battery cathode material enterprises will usher in better market opportunities than the first half of the year. On the other hand, material companies actively extend to the upstream of the industrial chain to become a new trend, thus reducing the purchase price can indeed make material companies reduce costs and improve profitability.
Originally published by China Automotive News, August 28, 2023