A shares exceeded 3 trillion yuan on the track, and there was big news.
After the market today, according to official website of the Ministry of Industry and Information Technology, the Ministry of Industry and Information Technology publicly solicited opinions on the regulatory conditions and announcement management methods (draft for comments), which mentioned that lithium battery enterprises should be guided to reduce manufacturing projects that simply expand production capacity, strengthen technological innovation, improve product quality and reduce production costs. The exposure draft also mentioned that the annual expenses for research and development and process improvement of lithium battery enterprises are not less than 3% of the main business income.
In recent years, the capacity of lithium batteries in China has expanded rapidly. According to the data disclosed by China Automotive Power Battery Industry Innovation Alliance, as of June 2023, the capacity of lithium batteries in China has reached 1860GWh. It is estimated that by 2025, the capacity of lithium batteries in China may exceed 3000GWh. Insiders pointed out that at present, the supply of high-end and high-quality lithium batteries is still insufficient, while the supply of low-end lithium batteries is excessive, and market competition is intensified.
Analysts believe that in the future, with the slowdown in the expansion of lithium battery industry and the high demand in 2024, this round of lithium battery industry will go to the library or come to an end. According to Wind data, as of the close of May 6, the total market value of the lithium battery sector in the A-share market exceeded 3 trillion yuan.
Heavy new energy
On May 8, according to official website of the Ministry of Industry and Information Technology, in order to further strengthen the management of lithium-ion battery industry and promote the high-quality development of the industry, the Electronic Information Department of the Ministry of Industry and Information Technology revised the Specification Conditions for Lithium-ion Battery Industry (2021 Edition) and the Management Measures for Announcement of Lithium-ion Battery Industry Specification (2021 Edition) to form the Specification Conditions for Lithium-ion Battery Industry (2024 Edition) and the Management Measures for Announcement of Lithium-ion Battery Industry Specification (2024 Edition)
The exposure draft mentioned that lithium battery enterprises and projects should meet the requirements of national laws and regulations such as resource development and utilization, ecological environmental protection, energy conservation management, and safety production, meet the requirements of national industrial policies and related industrial planning and layout, meet the requirements of local land space planning and ecological environmental protection special planning, and meet the requirements of "three lines and one order" ecological environment zoning control. Guide enterprises to reduce manufacturing projects that simply expand production capacity, strengthen technological innovation, improve product quality and reduce production costs.
According to the exposure draft, the energy density of energy-type single battery using ternary material (lithium nickel cobalt manganate) is ≥230Wh/kg, and the energy density of battery pack is ≥ 165 Wh/kg; The energy density of energy-type single battery made of Ferrous lithium phosphate and other materials is ≥165Wh/kg, and the energy density of battery pack is ≥120Wh/kg. The power density of power cell is ≥1500W/kg, and the power density of battery pack is ≥1200W/kg. The cycle life of single battery is ≥1500 times and the capacity retention rate is ≥80%, and the cycle life of battery pack is ≥1000 times and the capacity retention rate is ≥80%.
In terms of production, operation and technological level, the exposure draft also mentioned that enterprises should meet the following conditions: they should be incorporated in People’s Republic of China (PRC) according to law and have independent legal personality; Have the ability of independent production, sales and service of related products in lithium battery industry; The annual expenses for R&D and process improvement shall not be less than 3% of the main business income, and enterprises shall be encouraged to obtain the qualifications of independent R&D 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 their own or participate in the joint construction of pilot platforms; The main products have technical invention patents; At the time of reporting, the actual output of the previous year is not less than 50% of the actual production capacity of the same year.
After the release of this draft for comments, it has aroused great concern in the market. According to Wind data, as of the close of May 6, the total market value of the lithium battery sector in the A-share market was as high as 3,074 billion yuan.
How big is the impact?
In the past few years, destocking has been a key word in the lithium battery industry.
Stimulated by the rapid growth of new energy electric vehicles, major lithium battery companies have accelerated the expansion of production capacity. The large-scale expansion of production from 2020 to 2022 began to be released in 2023, and the phenomenon of overcapacity in lithium batteries has become increasingly prominent.
According to the data disclosed by China Automotive Power Battery Industry Innovation Alliance, in recent years, the capacity of lithium batteries in China has expanded rapidly. As of June 2023, the capacity of lithium batteries in China has reached 1860GWh.
According to the investment and expansion projects of domestic lithium battery enterprises, China Automotive Power Battery Industry Innovation Alliance predicts that by 2025, China’s lithium battery production capacity is likely to exceed 3000GWh. In terms of capacity utilization rate, as of June 2023, the capacity utilization rate of China’s lithium battery industry has dropped to about 40%, and it is likely to drop to about 35% by 2025.
Hongye Futures mentioned in a research report that as of the end of November 2023, the domestic lithium battery production growth was still higher than the installed capacity, resulting in a continuous increase in inventory.
However, insiders pointed out that the supply of high-end and high-quality lithium batteries is still insufficient, while the supply of low-end lithium batteries is excessive, and the market competition is intensified. Tail enterprises with low-end products mainly rely on price wars to gain market space, and the profit space continues to be compressed, which will be gradually eliminated. The enterprises with stronger technical strength will eventually survive in the industry.
Therefore, the Ministry of Industry and Information Technology proposed in the latest exposure draft that enterprises should be guided to reduce manufacturing projects that simply expand production capacity, strengthen technological innovation, improve product quality and reduce production costs.
The exposure draft also clearly requires that lithium battery enterprises spend no less than 3% of their main business income on R&D and process improvement every year.
At present, developing new technologies and going to sea may be a good choice for lithium battery enterprises. In fact, the leading lithium battery enterprises in China have begun to exert their efforts in these two aspects, specifically:
On the one hand, new technologies of lithium batteries emerge in an endless stream, which has attracted much attention from the market. Among them, the outstanding performances are: large cylindrical batteries with 100 million weft lithium energy have been mass-produced; Contemporary Amperex Technology Co., Limited’s rechargeable battery technology has obvious advantages, and its products have been installed on a large scale; On the other hand, domestic lithium battery leaders have planned and laid out their production capacity in Europe and America. By the end of 2023, the lithium battery enterprises that have laid out overseas manufacturing bases are basically domestic head enterprises, including Contemporary Amperex Technology Co., Limited, Guoxuan Hi-Tech, Zhongyiwei Lithium Energy and Huineng Technology, and the planned production capacity has exceeded 500GWh.
The inflection point is approaching
Since 2023, the price of lithium carbonate futures has been falling all the way down, from the highest of 240,000 yuan/ton to the low of 86,000 yuan/ton. Industry analysts believe that the overcapacity of power lithium battery manufacturers may be the main reason for the decline in lithium carbonate prices.
It is worth noting that since February this year, the price of lithium carbonate futures has stabilized, and the overall price has remained at 110,000 yuan/ton.
Analysts believe that in the future, with the slowdown in the expansion of lithium battery industry and the high demand in 2024, this round of lithium battery industry will go to the library or come to an end.
According to the analysis of the latest research report of Everbright Securities, in the first quarter of 2024, the profitability of lithium battery materials stabilized and it is expected to achieve recovery.
Everbright Securities said that the decline in the price of upstream resources such as lithium carbonate, the intensification of market competition and the reduction of inventory have jointly led to a decline in the profitability of upstream resources and midstream materials, especially those with strong periodicity. However, due to the decline of lithium price, the gross profit margin of the battery link has been improved against the trend, and its profitability has been enhanced. At the same time, the profitability of structural parts and ternary precursor links remained stable due to the superior pattern.
The report further pointed out that judging from the marginal change of profitability in the first quarter of 2024, the fluctuation of profitability in most midstream links has gradually narrowed, and showed a trend of stabilization and recovery, especially in Ferrous lithium phosphate, electrolyte, negative electrode and other segments, showing a rebound in profitability.
Editor: Tactical constancy
Proofreading: Wang Chaoquan