The increase in market demand and product prices have made lithium battery ternary precursors booming !
Cathode material
China’s cathode material market shipments will be 1.13 million tons in 2021, a year-on-year increase of 116%.
Among them, the shipment of ternary cathode materials was 430,000 tons, an increase of 80% year-on-year. The overall market share declined slightly, but the shipment of high-nickel cathodes increased significantly.
The strong demand in the downstream market has led to a surge in the shipment of ternary precursors, and the production and sales of ternary precursors for lithium batteries are generally booming.
The increase in product prices has helped improve the cost per ton and boosted the performance of ternary precursor manufacturers.
Overall, in 2021, the revenue and net profit of ternary precursor manufacturers will increase year-on-year, and the increase in net profit is significantly higher than the increase in revenue, indicating that the profitability of ternary precursor manufacturers’ products has increased significantly.
Entering 2022, the overall new energy vehicle market still maintains a growth trend, driving the first-quarter revenue and net profit of lithium power battery ternary precursor manufacturers to continue to increase year-on-year.
It is worth noting that with the intensification of market competition, the ternary precursor market is also undergoing dramatic changes, including competition entities, capacity expansion, product technology, industrial layout and other links, which will significantly impact the future lithium battery ternary precursor market, mainly reflected in the following aspects:
Strong demand
The strategic binding of huge orders will help the competitiveness of leading enterprises to increase.
Since 2021, the strong demand in the downstream market has generated a strong demand for lithium battery ternary precursors, which has enhanced the leading enterprises with strong competitive advantages in production capacity, products, capital, supply chain, etc. to obtain more development opportunities.
For example, both supply and demand parties have signed strategic cooperation agreements to lock in orders for ternary lithium power batteries in the next 3-5 years
The signing of long-term orders will provide a guarantee for the future performance growth of the leading manufacturers of lithium battery ternary precursors, and is expected to further increase their shipments and market concentration, and consolidate their leading position in the industry.
Expansion
The expansion of production capacity is intensified, and the construction of integrated projects is the direction of expansion.
The global power battery industry is sprinting into the TWh era, and the large-scale expansion of power battery production requires the rapid expansion and follow-up of its upstream raw material supply chain.
The continuous growth of market demand provides a guarantee for the expansion of ternary precursor enterprises. In order to ensure stable supply of raw materials, reduce procurement costs and enhance comprehensive competitiveness, integrated industrial layout has become the direction for the expansion of the lithium battery ternary precursor enterprises.
New production capacity projects generally extend from precursors to upstream recycling of cobalt sulfate, nickel sulfate, nickel beans, nickel ore and downstream waste batteries. The purpose is to build a diversified raw material supply system, increase the proportion of self-supplied raw materials, and improve battery manufacturers‘ product profitability.
It is worth noting that while the large-scale expansion of ternary precursor companies has led to intensified market competition, upstream raw material companies and downstream cathode and battery companies are also investing in ternary precursor projects, which will also bring huge competition pressure and challenges to precursor companies.
Under this circumstance, leading enterprises with integrated industrial layout will have stronger ability to withstand pressure, while small and medium-sized enterprises may be eliminated in the fierce competition
High-nickel products
Diversified layout enriches product portfolio, and high-nickel products become core competitiveness.
With the significant increase in the penetration rate of LFP batteries in the power market with the advantages of cost performance and safety, the LFP lithium battery energy storage market continues to grow, and the market demand for LFP materials has recovered significantly, which in turn drives the growth of the precursor iron phosphate market demand.
The substantial growth in overseas sales of new energy vehicles has led to a further increase in the penetration rate of the high-nickel power battery market, which has led to an increase in the market demand for high-nickel cathode materials and high-nickel precursors.
Under this circumstance, many power battery companies are laying out the power and energy storage battery market at the same time, and have two product technical routes of ternary and LFP, so they have procurement demand for ternary materials and LFP materials at the same time.
In order to meet the diversified needs of battery companies, a number of ternary cathode material companies have begun to diversify their layout, adding LFP materials on the basis of ternary materials to expand the company’s cathode business.
While laying out the iron phosphate business, precursor manufacturers continue to strengthen their product competitiveness in the field of ternary precursors, and at the same time build high-nickel precursors into their flagship products.
The ternary precursors have been gradually transformed and upgraded from 5 series and 6 series products to 8 series and above high nickel products, and 9 series products have also made breakthroughs, and a number of new high nickel and NCMA precursor products have been introduced to the market.
