Guotai Junan: The trend of high-voltage iron-lithium is expected to accelerate the differentiation of enterprises in the industry.

Guotai Junan released a research report stating that with the increasing demand from end users for long battery life and high-speed charging, high-energy-density lithium iron phosphate fast-charging batteries have become the flagship products of various battery companies, and lithium iron phosphate positive electrode materials are therefore quickly being iterated towards high voltage density. However, high voltage density has a high technical barrier, with only a few companies having the capacity to effectively supply it. Currently, there is a relatively tight balance between supply and demand, and changes in product demand structure are expected to accelerate differentiation among industry players. The report believes that companies that have mastered core production processes and have the ability to mass-produce high-voltage density lithium iron phosphate will benefit greatly. The tight balance between supply and demand is driving up prices, which in turn will boost performance. Beneficiaries include: Hunan Yuneng New Energy Battery Material (301358.SZ) and Fulin Precision (300432.SZ). Guotai Junan's main points are as follows: Lithium iron demand remains high, trend towards high voltage density is clear Global power battery installations are expected to reach 894.4GWh by 2024, an increase of 26.8% compared to the previous year. In China, installations are expected to reach 533GWh, a 37.5% increase year-on-year. The demand for lithium iron phosphate positive electrode materials is maintaining a relatively high growth rate. Current power battery technology is evolving towards higher energy density and fast charging. Fast charging batteries need to reduce the thickness of the electrode sheets to reduce internal resistance and improve discharge rate. Increasing the pressure density of lithium iron phosphate can maintain or increase the energy density of the battery even with thinner electrode sheets. Many battery companies are aligning their products towards high voltage density lithium iron phosphate. Changes in demand structure, price increases will drive rapid improvement in performance for some companies Due to the sustained high growth in demand for lithium iron phosphate, many manufacturers are entering the market, resulting in a relatively dispersed industry landscape. Excessive capacity expansion has led to an oversupply situation, causing prices and profits to decline sharply for industry players. However, starting from 2024, demand for high voltage lithium iron phosphate has rapidly increased, reaching a tight balance between supply and demand for high-end products, leading to a significant price increase. Changes in product demand structure will accelerate differentiation among industry players, with only companies with mid-to-low-end capacity continuing to face fierce competition in the market, while companies with the capacity for mass production of high voltage lithium iron phosphate will benefit from the industry's accelerated consolidation, achieving both volume and price increases. High voltage lithium iron phosphate has high technical barriers, currently dominated by the phosphate iron method and the ferrous oxalate method To produce lithium iron phosphate with a powder compaction density of over 2.6g/cm3, a secondary sintering process is required using the phosphate iron method. The secondary sintering process increases energy consumption, reduces production efficiency, increases product losses, and leads to higher costs for high voltage lithium iron phosphate. Only companies that can control costs effectively can truly industrialize high-voltage lithium iron phosphate. The ferrous oxalate method is not advantageous when the cost is high in the dominant market for conventional products. However, the ferrous oxalate method does not involve secondary sintering in the entire process and can produce high voltage lithium iron phosphate products, avoiding material and energy losses from secondary sintering, while also shortening the production steps and increasing production efficiency. When producing high voltage lithium iron phosphate, the cost difference with the phosphate iron method significantly narrows. Therefore, in the situation of tight balance between supply and demand for high voltage lithium iron phosphate, it has become one of the optimal process routes. Risk warning: End demand may be lower than expected, intensified competition, etc.