It is almost certain that the gross margin pressure of lithium enterprises in the first quarter is relatively large:
First, the cost of upstream materials continues to rise; second, the capacity utilization rate/good product rate of lithium enterprises has reached the upper limit; third, the downstream price transmission is slow; fourth, the gradual release of new capacity and potential climb in recent years.
Of course, the core factor is the cost of upstream materials. Upstream material prices have been rising since last year, especially lithium carbonate prices since the beginning of the year.
This round of supply chain cost caused by the industry crisis, the recent also finally lifted to the table.
01
In the first quarter, lithium enterprises are facing greater gross margin pressure
In fact, lithium upstream material prices, is not a new thing.
Since the second half of 2020, the price of positive electrode, negative electrode and electrolyte has been rising, and the price of diaphragm has also begun to increase recently and demand exceeds supply. This has been analyzed many times and will not be repeated.
Among them, the price of lithium carbonate rose more obviously, less than 60,000 yuan/ton at the beginning of last year, 300,000 yuan/ton at the beginning of this year, and recently the highest has exceeded 500,000 yuan/ton, nearly 10 times a year.
In the past year, the combined price of upstream materials for Lithium Batteries rose by more than 50 per cent, while the price of lithium batteries was generally stable until the second half of last year, when some modest price increases began, but the price increase of products was much lower than that of materials costs.
For this reason, the gross profit margin of most lithium enterprises fell quarter by quarter last year. Since this year, with the sharp rise in the price of lithium carbonate, lithium electric enterprises' gross margin pressure is more obvious, this will soon be verified in a quarterly report.
02
The lithium enterprise was fed up and fought
Under the background of rising upstream costs, especially the soaring price of lithium carbonate, the downstream lithium electric enterprises finally could not bear it.
In early March, during the two sessions, Ningde Yuqun submitted a proposal "on taking effective measures as soon as possible to promote the domestic lithium resource supply and price stabilization proposal", pushing the upstream and downstream costs to the table.
Xin Guobin, vice minister of the Ministry of Industry and Information Technology, pointed out that to strengthen resource security, focus on meeting the production needs of power batteries, moderately speed up the development of domestic lithium resources, crack down on hoarding, price gouging and other unfair competition.
In fact, the upstream material price crisis facing the lithium industry is similar to the sharp rise in silicon prices in the photovoltaic industry last year.
In June 2021, a photovoltaic cell giant publicly reported that upstream silicon material enterprises deliberately create polysilicon, silicon chip shortage, hoarding and price gouging, and suggested that the competent authorities come forward to coordinate.
But since then, such moves have done little to ease silicon prices.
This is also for this year's lithium downstream lithium resource prices on the upstream of the "struggle" effect, have concerns and doubts. Hoarding is not desirable, but there is nothing wrong with normal business behaviour when supply and demand are out of balance.
03
Lithium companies are forced to pass on prices downstream
It is one thing to urge the upstream price to fall, but it is not the only way to solve the current gross margin problem of lithium enterprises. After all, lithium enterprises are facing not a single raw material price rise, but almost all materials price rise; Nor is it a short-term rise in stages, but a long-term sustained rise.
This is not a simple problem, in addition to saving money, but also to open source. The simplest way to absorb upstream cost pressures is for battery prices to rise in tandem.
Recently, Ningde times confirmed to the media that due to the price of upstream raw materials rose significantly, the company dynamically adjusted the price of some battery products.
Ningde, which has the best customers and enjoys the highest gross margins, is already under cost pressure, not to mention other lithium companies, which explains the need for this round of price rises.
From the data, so far this year, the price of lithium iron phosphate cell from about 0.60 yuan /Wh to about 0.69 yuan /Wh, or about 15%; Ternary (622) cell price rose from about 0.69 yuan /Wh to about 0.74 yuan /Wh, an increase of about 7%.
04
Terminal electric cars have also been forced to raise prices
As the downstream of Lithium Battery enterprises are mainly electric vehicles, the gross profit margin of the electric vehicle industry is generally low, and the cost of lithium battery system accounts for about 40%. Therefore, the rising cost of lithium battery has great cost pressure on electric vehicle enterprises.
In February, Great Wall Euler announced that it was suspending orders for white and black cats, with cost issues perhaps one of the main reasons.
However, most of the car companies choose to increase prices, Tesla, Xiaopeng, ideal and more than a dozen new energy vehicle enterprises have announced price increases, including: Tesla in March, the price of two prices ranging from 20,000 to 30,000 yuan, Xiaopeng car price ranging from 10,000 to 20,000 yuan, ideal ONE price from 338,000 yuan to 349,800 yuan.
Earlier, Ideal Automobile Li Xiang had joked on weibo, and battery manufacturers have already agreed on the price of batteries in the second quarter of the brand, basically immediately announced the price increase. Haven't price of the brand, most of the price range has not yet negotiated, such as negotiated after the general will immediately price. The strength of the battery cost increase in the second quarter was ridiculous.
It can be seen that this round of upstream material price rise has been transmitted to electric vehicles through the price rise of lithium, and this momentum will continue, even intensify.
At present, the sales momentum of new energy vehicles remains good. In February 2022, 317,000 new energy passenger vehicles were sold, up 189% year on year. In January-February, 734,000 units were sold, up 162% year-on-year. This may be a positive factor for consumers to absorb higher prices.
05
Lithium enterprise gross profit rate and performance trend
This round of price rise in the lithium battery industry chain is finally transmitted from the upstream resource end to the consumer end, and consumers pay the bill, forming a closed loop.
However, as mentioned at the beginning of this paper, there are many factors affecting the current gross profit margin of lithium enterprises, including upstream material rise, downstream price transmission, capacity utilization rate/good rate, new capacity delivery and other factors.
At present, upstream material prices despite the intervention of external factors, but the possibility of a short-term sharp fall is not big. If the current high level is maintained, the pressure on lithium battery companies will continue.
For downstream price transmission, this depends on the game between lithium enterprises and electric vehicle enterprises. At present, the game has just begun, and the final payment of consumers is also very important. Electric vehicle enterprises need to seek a balance between price and sales volume.
In addition, in the past two years, a lot of new lithium capacity, in the current insufficient effective capacity, began to put into production, fixed asset depreciation increases, different lithium enterprises have different climbing efficiency, at the same time, due to the shortage of raw materials may lead to insufficient capacity utilization, further affect the gross margin.
It can be seen that at this critical point in the first quarter, the gross margin pressure faced by lithium enterprises is very big, there are many influencing factors, and there are differences, leading enterprises ningde times has taken a lot of measures, not to mention other lithium enterprises.
In any case, the gross margin of lithium enterprises in the first quarter of the trough is already a large probability event, wait and see.
As for when it can be reversed, it depends on the game between lithium companies and upstream suppliers and downstream car companies. These factors are very delicate, but the experience of the photovoltaic industry last year is not optimistic.
However, one thing can be confirmed, the current competitive environment and upstream and downstream game situation of lithium industry are destined to make it almost impossible for lithium industry to have excess profits at the present stage, and more importantly, it is the lowest gross margin level to maintain the steady development of the industry, which will also be the compromise result that all parties will actively pursue in the game.
