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The introduction of the Standard Conditions for the Lithium Battery Industry (2024 Edition) (Draft for Comments) will effectively solve the problem of phased overcapacity in multiple links of the lithium battery industry chain, which is conducive to the long-term healthy development of the industry.
On May 8, the Ministry of Industry and Information Technology issued the Standard Conditions for Lithium Battery Industry (2024 version) (the draft for comment) and the Administrative Measures for the Announcement of Lithium Battery Industry Standard (2024 version) (the draft for comment) (the draft for comment for short). Among them, the statement of "guiding enterprises to reduce manufacturing projects that simply expand capacity, strengthening technological innovation, improving product quality, and reducing production costs" has attracted industry attention.
Stimulated by the multi profit policy, on May 9, the new energy sector set off a rising tide, Tianli Lithium Energy 、 Jinyang Shares 、 Combined Technology (Rights protection) 20cm limit rise, Tianhong Lithium Battery 、 Xiangfenghua 、 Dangsheng Technology It rose by more than 11%, and the Wind Lithium Battery Index also rose by more than 4% in a single day. From a long-term perspective, the lithium battery industry is in a boom recovery period. As of May 15, Eastmoney The lithium battery index rose 2.07% in the past 20 days and more than 20% in the past 60 days.
Accelerate the clearing of backward production capacity
In recent years, with the explosive growth of new energy vehicles, China's lithium battery industry has also expanded rapidly. The influx of capital has transformed the lithium battery industry from "supply exceeds demand" to "supply exceeds demand". Both the material side and the power battery side are plagued by phased overcapacity.
The Draft gives guidance and specific suggestions on industrial layout and project establishment, production and operation, process level, product performance and other aspects to promote the transformation of lithium battery industry capacity to high-end and high-quality. In the "industrial layout and project establishment" section of the Draft for Comments, it is mentioned that enterprises should be guided to reduce manufacturing projects that simply expand capacity, strengthen technological innovation, improve product quality and reduce production costs. In the section of "production, operation and process level", it is mentioned that lithium battery enterprises should have independent production, sales and service capabilities of related products in the lithium battery industry; The annual expenses for R&D and process improvement shall not be less than 3% of the main business income.
At the same time, the Draft also proposes to encourage enterprises to obtain the qualifications of independent research and development institutions, engineering laboratories, technology centers or high-tech enterprises at or above the provincial level; Encourage enterprises to create green factories; Encourage enterprises to build or participate in the joint construction of pilot platforms; The main products have technical invention patents; At the time of declaration, the actual output of the previous year was not less than 50% of the actual capacity of the same year.
"The high-end capacity of the lithium battery industry is not excessive, and the low-end repeated capacity needs to be cleared up quickly." Moke, president of True Lithium Research Institute, said that the actual output of the previous year was not less than 50% of the actual capacity of the same year when the application was made, which means that the access threshold is increasing. At the same time, enterprises need to increase research and development investment to promote the innovation of lithium battery technology, This means that some backward production capacity will be eliminated more quickly.
Economist Yu Fenghui said that the impact of this policy on the lithium battery industry is mainly reflected in the following aspects: first, it will urge enterprises to pay more attention to technological innovation and product upgrading, especially to improve battery energy density and safety, which will help the overall technological progress of the industry. Secondly, by limiting the blind expansion of production and encouraging high-quality development, it helps to avoid excessive competition and overcapacity in the industry and improve industry concentration. For lithium battery enterprises, this is both a challenge and an opportunity. Those enterprises with core technology, efficient production and cost control capabilities will be more favored by the market.
Huang Xiuyu, an analyst at Dongguan Securities, also said that in the context of overcapacity in the current lithium battery industry, the Ministry of Industry and Information Technology revised the industry's standard conditions, guided technological innovation, transformation and upgrading, and promoted high-quality and healthy development. It will speed up the clearing of backward production capacity, prevent disorderly competition at low prices, and help the leading enterprises with technical advantages and high-quality production capacity to improve capacity utilization and profit recovery. The revised draft pays attention to product quality and low-carbon environmental protection, and actively paves the way for enterprises to go to sea, which is conducive to improving the international competitiveness of enterprises and benefiting the leading enterprises as a whole.
Press the pause button for multiple "crossover" items
When lithium prices remained high, the entire lithium battery industry chain became a hot spot for capital investment and attracted many enterprises to explore cross-border gold. However, with the intensification of the contradiction between supply and demand in the lithium battery market, the enthusiasm for capital investment also gradually faded. Since this year, many enterprises have suspended or terminated lithium battery projects and become more cautious about expanding production.
Mainly engaged in display business Baoming Technology On April 29, the company announced that it planned to terminate the production base project of composite copper foil (lithium battery cathode current collector material) with an original investment of 6.2 billion yuan. Baoming Technology said that due to changes in the investment plan, in order to avoid waste of project resources, it decided to terminate the investment project.
Huasoft Technology On April 26, it announced the termination of two electrolyte additive projects with a total investment of 450 million yuan. Huasoft Technology said that, affected by market conditions, investment environment, changes in administrative approval policies and other factors, the company decided to terminate the project with an annual output of 12000 tons of lithium battery electrolyte additives and the project with an annual output of 6000 tons of fluoroethylene carbonate (FEC) lithium battery electrolyte additives.
In addition, food enterprises Semen sesami nigrum Relevant lithium battery projects are also suspended. On April 19, some investors asked questions about the energy storage lithium battery project of Black Sesame Company, which has exceeded the expected completion time, Black Sesame replied: "In view of the significant changes in the market situation of new energy batteries since the second half of 2023, which are significantly different from the assumptions of the company's project feasibility study, the company closely observes the changes in external conditions and calmly faces the major changes in the market, does not advance rashly, and suspends project construction
In addition to the above cases, since last year, many enterprises have cancelled or terminated lithium battery projects, such as: Zhongyuan Shares Suspend the fixed growth plan for the integrated construction project of high-performance lithium-ion battery cathode materials with an annual output of 200000 tons; GCL Energy Technology After the adjustment of the convertible bond scheme, the project with an annual output of 30000 tons of battery grade lithium carbonate was deleted; Suntech The production of Lichengdao base is suspended; Neozeus Terminate the construction of Zhuhai New Zebang Electronic Chemicals Project; wait.
Yu Fenghui said that a number of listed companies terminated or suspended the construction of new projects, reflecting that the lithium battery industry is undergoing a period of adjustment, the growth of market demand is slowing down, and enterprises began to rationally assess investment risks. This shows that the industry is shifting from rapid expansion in the past to refined management and optimization of existing capacity, and also reflects the market's expectation of future demand growth for lithium batteries has been adjusted.
Qiu Boyuan, manager of Kangzhuang Asset Fund, said that market forces are forcing them to stop expanding production and promote capacity clearing. In the short term, the capacity of this market is indeed oversupply, especially in low-end capacity, but in the long term, high-quality capacity is far from enough.
The performance of material enterprises hit bottom in the first quarter
Immediate reversal?
At the current stage when the investment heat has weakened and lithium battery projects have been suspended or terminated, the material end enterprises in the middle and upper reaches of the industrial chain are also hard to escape the cyclical impact of the lithium battery industry, and the performance of the first quarter of this year has changed.
With the "two giants of lithium industry" Tianqi Lithium and Ganfeng Lithium For example, the net profit in the first quarter of 2024 will change from profit to loss. In the first quarter of 2024, Tianqi Lithium realized an operating revenue of 2.585 billion yuan, down 77.42% year on year; The net profit loss was 3.897 billion yuan, down 179.93% year on year. Over the same period, Ganfeng Lithium achieved an operating income of 5.058 billion yuan, a year-on-year decrease of 46.41%; Net profit loss was 439 million yuan, down 118.31% year on year.
In addition, cathode material enterprises Betterley 、 Putailai The performance of. According to Wind statistics, among the 19 A-share listed companies in the lithium sector, 15 companies experienced a decline in revenue growth rate in the first quarter of 2024, and 14 companies experienced a decline in the growth rate of net profit attributable to the parent company, accounting for 78% and 73% respectively.
From the perspective of reasons, the first is the price factor. Ganfeng Lithium said that the fluctuation of lithium products and lithium battery market caused the sales price to fall in the current period. Salt Lake Shares Said that, on the whole, there was a phased mismatch between market supply and demand, and prices showed a downward trend. This led the downstream demand side to show a cautious attitude when purchasing, mainly to digest inventory and control the risk of loss from price decline.
It is not difficult to find that the enterprises in the middle and upper reaches of the lithium battery industry chain have basically moved towards the node of loss. In the face of the current industry situation, how can lithium mining enterprises and material enterprises alleviate the development pressure?
"The real bull stock is not because of the huge profits, but because of the scale." Qiu Boyuan believes that at this stage, lithium mining enterprises should vigorously deploy exploration, mining and smelting, integrate themselves into the entire industrial chain, and ask for value from the industrial chain, scientific and technological innovation, and ultimate efficiency. Lithium enterprises must be soberly aware that lithium is a reusable material, which is fundamentally different from crude oil. The global demand for lithium will not expand indefinitely. Finally, lithium mining enterprises and aluminum mining enterprises will be the same. Their return on net assets, gross profit rate of sales, and net profit rate of enterprises will all converge to the basic level of social profitability. Lithium mining enterprises should pay attention to the emergence of revolutionary technologies in the energy field, such as hydrogen fuel cells, controllable nuclear fusion, solid-state batteries, etc., which may change the pattern of the industry.
Since December 2022, the price of lithium carbonate has continued to decline. Compared with the peak price of nearly 600000 yuan/ton, it has now dropped to about 100000 yuan/ton, a decrease of about 80%. Many people believe that the turning point for the industry to turn around has already come. So, has the turning point for the lithium battery industry to turn around at the bottom really come?
Li Yan, the fund manager of Huaxia Fund, said that through in-depth research, the lithium battery industry is currently in the bottom reversal stage, with some leading companies' capacity utilization rates as high as 80% to 100%, and the fundamentals have clearly improved.
Xiong Yuzhou, the fund manager of Harvest Global Innovation Leading Equity QDII, also said that based on the current node, combining inventory cycle, new demand scenarios, and supply side marginal changes and other factors, the opportunity for industry reversal is already available, and the gradual rise and recovery of prices of some products in the industrial chain is also a lateral verification. "At present, lithium batteries are undoubtedly in a state of cyclical low undervaluation (mainly measured by PB, PS, etc.). With the improvement of fundamentals and the increasing signal of earnings, we are still looking forward to the future performance of the sector."
In Yu Fenghui's view, the sharp drop in the current price of lithium carbonate is more reflected in the price correction after the adjustment of the supply and demand relationship. Whether it is an industry reversal or not, it is also necessary to observe the subsequent supply and demand balance, the global economic recovery and the growth trend of the demand for new energy vehicles. "This may be seen as a rebound in the short term, but in the long run, if market demand continues to grow, the industry is expected to enter a more healthy and stable growth cycle."
Qiu Boyuan said that at present, the price of lithium carbonate and the price of products in all links of the entire industry chain are at the bottom stage. Considering that new energy vehicles, energy storage and other fields continue to grow rapidly, the industry's boom reversal is certain.
(This article has been published in the Securities Market Weekly on May 18. The individual stocks mentioned in the article are only for example analysis, not for trading recommendation.)
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