Guolian: The inflection point of supply and demand reversal of lithium hexafluorophosphate will be reached in 2025.

Guolian released a research report stating that with the improvement in downstream demand for lithium batteries and rising price expectations, the lithium hexafluorophosphate industry is expected to be the first to achieve a supply-demand reversal by 2025. Currently, the entire industry is at its profit bottom, except for Guangzhou Tinci Materials Technology, which is either making minimal profits or experiencing losses. Especially small manufacturers are facing severe losses, combined with problems such as low product quality, resulting in low operating rates or even production stoppages, confirming a trend of tightening supply. It is expected that with the improvement in the beta situation in the lithium hexafluorophosphate industry, leading companies are expected to benefit first. Guangzhou Tinci Materials Technology (002709.SZ), Do-Fluoride New Materials (002407.QZ) are recommended, and attention is also directed to Shenzhen Capchem Technology (300037.SZ), which has acquired Jiangxi Shilei. Guolian's main points are as follows: Further concentration of the lithium hexafluorophosphate market In 2023, global shipments of lithium hexafluorophosphate were 169,000 tons, with China accounting for 92% of the shipments. The market share of lithium hexafluorophosphate in China is mainly concentrated in leading companies, with Guangzhou Tinci Materials Technology accounting for 31% of the shipment share in 2023, ranking first, followed by Do-Fluoride New Materials and Tonze New Energy Technology, with shipment shares of 23% and 10% respectively. In 2024, the market share of the CR3 shipment continues to rise, exceeding 80%, while second and third-tier small companies are closing down, further increasing the concentration of the lithium hexafluorophosphate market. Lithium hexafluorophosphate market prices have stabilized Lithium hexafluorophosphate accounts for about 35% of the cost of electrolyte raw materials. Starting from the second half of 2020, rapid growth in new energy vehicle sales combined with supply constraints led to a shortage of lithium hexafluorophosphate, causing prices to rise rapidly, reaching a peak of 590,000 yuan per ton in February 2022. With the continued escalation of the policy of phasing out subsidies for new energy vehicles in 2022, combined with severe overcapacity, prices continued to fall to the breakeven point for second-tier manufacturers, leading to widespread production stoppages. The supply-demand relationship began to improve, and as of November 29, 2024, the average price of lithium hexafluorophosphate was 58,800 yuan per ton. With the rise in the price of raw material lithium carbonate and increased processing fees, lithium hexafluorophosphate prices have stabilized, with strong expectations for further increases. Increased downstream demand driving high demand for lithium hexafluorophosphate From January to October 2024, domestic sales of new energy vehicles reached 9.75 million units, an increase of 33.9% year-on-year; in terms of installed power batteries, from January to October 2024, the total installed capacity of power batteries in China reached 405.8GWh, an increase of 37.6% year-on-year, maintaining a high growth rate. From January to September 2024, China's new energy storage power stations added an installed capacity of 16.2GW, an increase of 23.5% year-on-year. The continuous increase in terminal demand will drive a continuous increase in the shipment of lithium battery raw materials. It is expected that from 2024 to 2026, global shipments of electrolytes will be 1.88 million tons/2.30 million tons/2.68 million tons; and global shipments of lithium hexafluorophosphate will be 230,000 tons/280,000 tons/320,000 tons in 2024-2026, with year-on-year increases of +34%/+22%/+17% respectively. Tightening supply of lithium hexafluorophosphate, industry operating rates rising As of November 2024, the total production capacity of domestic lithium hexafluorophosphate manufacturers is approximately 392,000 tons per year, an increase of only +28.5% from 2023, with the main additions coming from Guangzhou Tinci Materials Technology with 50,000 tons, Tonze New Energy Technology with 15,000 tons, and Zhejiang Yongtai Technology Co. with 10,000 tons. The CR3's total production capacity is currently 214,000 tons, with no plans to add new capacity in 2025. In terms of operating rates, in October 2024, the operating rate of the lithium hexafluorophosphate industry was approximately 70.6%. Currently, second-tier manufacturers are basically running at full capacity, first-tier manufacturers have recovered to around 80%, while the remaining small factories are experiencing very low operating rates or closures. It is expected that with the improvement in demand for lithium batteries and the establishment of a tightening supply trend, the supply-demand ratio in the lithium hexafluorophosphate industry will significantly improve by 2025. Risk factors: Demand for electrolytes falls short of expectations; significant fluctuations in raw material prices; risks of deviation in industry scale calculations.