Securities Times reporter Ye Lingzhen and Mao Kexin
In the past year, the production and sales of new energy vehicles have continued to hit new highs, and the contradiction between supply and demand of raw materials has become increasingly prominent. Under the pressure of price increases, the value chain of the power battery recycling industry that "turns waste into treasure" has been reassessed, and the prosperity has begun to rise, attracting industrial capital. Compete to enter.
Under the bullish market of raw materials, the recycling price of waste batteries has also risen. At present, the discount coefficient of ternary material recycling has jumped from about 30% off in the middle of last year to 140%, and the price of lithium iron phosphate cathode waste powder has increased within one month. times.
Although the profit margins of power battery recycling companies can be improved, high prices will bring a series of risks such as inventory and cash flow.
The long-term development of the industry cannot be helped by the rise in the price of raw materials alone.
After the tide recedes, a new round of industry reshuffle will inevitably come, and recycling companies with channel and technological advantages will win the competition.
For the entire industry, the relationship between rights and responsibilities in the recycling chain needs to be straightened out to solve problems such as disorderly competition and the environmental pollution it brings, so as to welcome the arrival of a larger wave of decommissioning.
Recycling prices are rising
"The price has risen too fast! Now the price system of the entire recycling market is in chaos." Zhao Weiduo, deputy general manager of Hunan Shunhua Lithium Industry Co., Ltd., told a reporter from Securities Times · e company, "In January last year, lithium iron phosphate cathode The waste powder is only 4,000 yuan/ton, and it rose to 40,000 yuan/ton in January this year. What’s more exaggerated is that it doubled directly in February, and the current price has reached about 80,000 yuan/ton.”
The rise in recycling prices is due to the soaring prices of raw materials for power batteries represented by nickel, cobalt and lithium.
In the past year, battery-grade lithium carbonate has been running wildly from 50,000 yuan / ton, and the current quotation has exceeded 500,000 yuan / ton, 10 times that of the same period last year; domestic electrolytic cobalt and electrolytic nickel are currently quoted at 570,000 yuan / ton and 22,000 yuan / ton. 10,000 yuan / ton, a year-on-year increase of about 60% and 80% respectively.
"The shortage of raw material resources and the superimposition of the 'dual carbon' goal clearly feel that the industry chain has increased its attention to the recycling end of lithium batteries." Zhao Weiduo said.
At present, the mainstream waste batteries on the market are divided into ternary lithium batteries and lithium iron phosphate batteries. The ternary lithium batteries are generally used for recycling, and the valuable metal materials in the waste batteries are extracted. The finished products include nickel sulfate, sulfuric acid Cobalt, lithium carbonate, etc.; lithium iron phosphate batteries are mainly used in echelon utilization scenarios such as energy storage power stations, low-speed electric vehicles, and power tools. With the rise in lithium carbonate prices, more and more companies will recover lithium iron phosphate The battery is directly used for lithium extraction.
According to reports, the recycling pricing of ternary batteries is based on the cobalt and nickel prices of Shanghai Nonferrous Metals Network, and is multiplied by a certain coefficient on this basis. Although lithium does not participate in the pricing during the recycling process, it will affect the price to a large extent. Coefficient; Lithium iron phosphate battery mainly extracts lithium element, and its recycling price is priced according to lithium point. Taking the price of metallic lithium as a reference, the current procurement coefficient is about 60-70%.
"In August last year, the overall discount factor for ternary lithium battery recycling was still 65%~75%, and it reached more than 100% at the end of last year, and it was upside down. Now the average level has risen to 120%~130%. For Yuan cathode sheets, because the content of lithium carbonate is higher, the procurement coefficient can even reach 140%." The relevant person in charge of Tianqi Co., Ltd. told the reporter of Securities Times · e company that the change in the procurement coefficient actually reflects the supply and demand relationship of the entire market, and Changes in market prices of metals other than cobalt and nickel.
70% of the cost of recycling companies comes from raw materials, and the serious upside down of the current procurement coefficient will obviously increase operating costs.
But even so, it is still difficult to stop the enthusiasm of the industry to "grab batteries".
"According to the current market demand and production capacity release, we expect that the price of lithium carbonate should not drop significantly this year, and will remain at a high level." An investor in the lithium battery industry chain in East China said that battery recycling companies are still profitable.
The relevant person in charge of Tianqi Co., Ltd. told reporters that at present, the gross profit margin may decline due to the increase in raw material procurement costs at the recycling end, but the prices of finished products such as lithium carbonate are also rising simultaneously, and the overall profit space has improved.
"In the process of rising lithium carbonate prices, recycling companies generally make money, which is nothing more than making more money and making less." Zhao Weiduo said frankly, but because of the high market prosperity, the atmosphere of rushing for goods is currently relatively strong, and battery recycling prices Being bullied, professional recycling companies will have a situation where “bad money drives out good money” because of their high fixed costs.
Impulsive mentality buries risk
The high prosperity of the power battery recycling industry can be seen from a set of data.
According to the company's data, there are 38,500 existing power battery recycling companies in my country, of which 3,321 power battery recycling-related companies will be added in 2020, a year-on-year increase of 142.94%; 24,400 will be added in 2021, a year-on-year increase of 635.17%.
According to Zhao Weiduo, among the more than 20,000 new recycling companies in 2021, there are a large number of intermediary traders who do not do processing and smelting, and only earn the difference in the circulation of batteries.
Tianqi Co., Ltd. also said in the survey of reception investors that according to the preliminary statistics of the company's procurement, about 70% of the raw materials come from social traders, and 30% come from battery factories.
Zhao Weiduo pointed out that in the case of bullish prices, some intermediate traders will hoard a large amount of batteries or scraps, and even form a price monopoly advantage in a certain area, and some battery factories or material factories are unable to cover their goods. To a certain extent, they have created a panic in the recycling market, and raised the market price and expectations of battery recycling.
According to the observation of the aforementioned investors, the overall mentality of the battery recycling industry is relatively impetuous.
"Some companies bought raw materials at a low level last year, and the prices soared in the short term, and they could easily earn a large price difference, which is much stronger than earning processing fees through hard work. There are also companies that used to be mainly engaged in cascade utilization or recycling. When the price of used batteries is soaring, they will even set up a separate trading company to directly earn the difference in trade.”
"At present, the power battery recycling industry is deep enough, and most of the entrants can make money, but once the prices of materials and batteries drop, there will definitely be a group of companies that are not solid enough to make quick money." Gaodian (Shenzhen) Li Liang, deputy general manager of Technology Co., Ltd., said frankly that recycling companies need fixed assets and teams to maintain stable production and operation, which are all fixed expenses, and also need to maintain a minimum inventory for continuous production.
Nickel, cobalt, and lithium are all small metals, and the market fluctuates greatly. Once the price starts to turn downward, the inventory in the hands of the recycling enterprise will drop rapidly, but the production line must be started. More production may mean more losses. And without production, the risk of inventory devaluation is higher.
"Generally speaking, when recycling batteries or waste materials, recycling companies require cash in stock, and when selling finished products, in the face of large material factories or battery factories, because the right to speak is not strong enough, there is usually a certain billing period. For small-scale recycling companies, the increase in the price of recycled batteries means more capital occupation." Zhao Weiduo told a reporter from Securities Times e Company, and from the procurement of scrap or retired batteries, to the generation of nickel sulfate and cobalt sulfate The delivery cycle of finished products such as lithium carbonate and lithium carbonate is one to two weeks. Once the price of lithium carbonate declines, it will bring huge cash flow risks to recycling companies.
"Currently, the price of raw materials is at a high level. The safest way for a formal recycling enterprise is to fast-forward and fast-out, to set production based on sales, and to purchase upstream raw materials based on the orders in hand. Although this may not be able to earn the difference in inventory, it can reduce the risk to The lowest." said the aforementioned investor.
technology-based
The field of battery recycling has attracted various players, covering almost the entire industrial chain of new energy vehicles, involving different backgrounds such as OEMs, battery factories, material factories and third-party recycling companies.
Among them, OEMs and battery factories control resources, which are the objects that material factories and recycling companies are competing to bind.
Material factories are most motivated to do recycling because the extracted metals can be used directly as raw materials, which in turn brings cost advantages.
A comparable case is that GEM, which is mainly engaged in recycling business, uses nickel sulfate, cobalt sulfate and other resources to produce cathode materials. The 2021 semi-annual report shows that its ternary precursor and cobalt tetroxide gross profit margins reached 25.63% and 20.66% respectively. In the same period, the gross profit margins of the two products of the cathode manufacturer Zhongwei Co., Ltd. were 12.45% and 12.01%, respectively.
In the context of rising raw material prices, the urgency of supply guarantees has prompted material factories to go down and recycle.
One way is to build its own recycling production line. For example, Huayou Cobalt, a ternary material factory, has two recycling companies: recycling technology and renewable resources. Currently, it has an annual production capacity of 65,000 tons of waste battery materials; the other is to invest in or strategic cooperation to bind the resources of third-party recycling companies. For example, Rongbai Technology has recently reached an agreement with GEM to invest in power regeneration, a battery recycling company under GEM, and purchase precursors from the latter for no less than 300,000 in the next five years. Ton.
The way battery factories set foot is similar to that of material factories, and leading companies are spending a lot of money to cultivate their own recycling sector.
Guangdong Bangpu, a subsidiary of CATL, is responsible for the battery recycling business. The Bangpu integrated new energy industry project in Yichang started construction at the end of last year, with a total investment of 32 billion yuan.
Guoxuan Hi-Tech also landed a 12 billion yuan project in Hefei, including production bases such as upstream raw materials for power lithium batteries and battery recycling.
In addition, battery factories such as Funeng Technology and Honeycomb Energy have entered the recycling industry chain through investment and cooperation.
The backgrounds of third-party recycling companies are diverse. In addition to the above-mentioned GEM, which specializes in resource recycling, there are also Guanghua Technology, which is mainly engaged in PCB (printed circuit board) materials and other chemicals, automotive intelligent equipment provider Tianqi Co., Ltd., and environmental protection companies High Energy Environment and Wangneng Environment, etc.
Companies in different industries have varying degrees of closeness to the recycling chain.
A reporter from Securities Times e Company noticed that Guanghua Technology itself has a ternary cathode material business, and has recently established cooperation with Aodong New Energy, Panasonic, Lishen Battery and other companies; Long-term coverage of automotive aftermarket businesses such as car dismantling and remanufacturing; environmental protection companies mostly cut into battery recycling through acquisitions, and they entered the market relatively late.
"Although third-party recycling companies have professional capabilities, they lack recycling channels. They need to negotiate cooperation with battery factories and vehicle manufacturers. They also need to find a way out for recycled resources or batteries that are used in cascade. There is a lot of work to do." True Lithium The founder of the research, Mo Ke, told a reporter from Securities Times e Company that the development prospects of the recycling business will be better only if the supply channels and downstream sales channels are on one side.
It is worth mentioning that the current recycling resources such as waste and leftovers produced by battery factories are more popular in the market, because the quality and consistency of these materials are relatively high, which saves the cost of dismantling for recycling companies and can generate higher yields. .
In terms of technology, many industry insiders believe that the key is to reduce costs and improve recycling rates.
A lithium battery industry analyst told a reporter from Securities Times e Company that the recovery rate of nickel and cobalt is relatively high at present, and the difficulty lies in the extraction of lithium.
According to Zhao Weiduo, in the current mainstream hydrometallurgy process, lithium extraction in ternary materials is generally followed by cobalt and nickel. The average recovery rate of lithium is 70% to 75%, and those with better processes can exceed 80%. The purity is only 80%~85%. If battery-grade lithium carbonate is produced, it needs to go through a processing process; and if the wet method is used to preferentially extract lithium, the recovery rate of lithium in ternary materials can reach 95%. Lithium iron phosphate material The recovery rate of lithium can also reach 92%, and the purity is higher, and the output lithium carbonate and iron phosphate can be directly returned to the battery production system.
"When the cost of raw materials is close, the higher the recycling rate and the higher the added value of the finished product, the greater the profit margin."
How to carry out flexible production in response to different market demands is also an important technical capability of recycling enterprises.
For example, the relevant person in charge of Tianqi Co., Ltd. said that when the battery industry is booming, cobalt sulfate can be produced for use in battery materials, and when the battery industry boom is declining, it can be converted to be used in the magnetic material industry, ceramic color and glaze industry, rubber or other industries. Alloy binder industry and other products in different industries.
In addition, the raw materials of battery recycling are non-standard products mixed with various types of batteries. How to produce standard products with the same quality as new materials is also an important technical barrier in the recycling industry.
"Factory technical capabilities and channel construction complement each other, and the combination of the two can maximize the value of the overall enterprise operation. At this stage, we believe that factory technical capabilities are the foundation. In the market competition of recycling channels, only the technical level is sufficient. Only when it is mature can it ensure that it has won enough partners in terms of channels." said the relevant person in charge of Tianqi Co., Ltd.
"From an investment point of view, cathode material manufacturers will not receive much attention, because the recycling business is only a supplement to their raw material sources. Among the third-party recycling companies, some companies have relatively low profits in their main business, and recycling is a separate sector. , which can contribute to greater performance flexibility, will be hotly hyped by funds. But in general, the recycling industry is now speculated as a half-cycle stock, and it is relatively dependent on the trend of metal prices." The above-mentioned lithium battery industry analyst Express.
Channel is King
Although the price increase of metals has detonated the recycling of power batteries, the industry as a whole is still in the initial stage of development. Whether it is to improve the recycling network or to increase the volume of retired batteries, it will take more time.
Competing for channels has become the key to the competition of recycling enterprises, which just reflects that the current channel construction is not complete.
A reporter from Securities Times · e company observed last year that most of the retired batteries actually flowed into informal small workshops, and this chaos has not been fundamentally reversed so far.
"How to collect the batteries is a big problem." Mo Ke bluntly said that small workshops generally pick out the batteries that can be reused and process them into batteries in sub-sectors such as pesticide sprayers and fishing tools. Most of the used ones are discarded at will. Even if they are sold, formal recycling companies will not dare to collect batteries with unknown channels.
From the perspective of resource reuse, the current recycling industry has little support for raw materials.
The aforementioned investors said that taking lithium carbonate as an example, the current lithium carbonate recycled through recycling channels only accounts for about 4% to 5% of the entire market.
Not sure where there will be more used batteries, recycling companies can only deploy through multiple channels to ensure foolproof.
In Li Liang's view, at present, recycling companies are basically fighting each other, especially when the price of materials is improving, each company has its own "unique hidden weapon" to make money, but there is no industrial synergy, and disorderly competition is very important. Seriously, to a certain extent also caused a waste of resources.
Due to being closest to resources and possessing technology, the role of battery factories in the chain will be highlighted in the future.
Li Liang said that with the introduction and evolution of services such as battery replacement mode and lifetime warranty, batteries will be gradually concentrated from scattered corners to OEMs and battery factories, and since OEMs generally hand over after-sales of batteries to batteries Factory and battery factory will become the main body of echelon utilization.
First, the battery factory has technical advantages and can easily solve many dismantling problems; secondly, the battery factory can accurately evaluate the residual value of the battery to maximize the value.
Enterprises in the recycling industry chain should think more about how to unite with battery factories.
So who should build the channel?
According to the production responsibility extension system, the vehicle enterprise should be the main body of responsibility.
Although car companies currently rely on 4S stores and maintenance points to set up more than 10,000 recycling outlets, but according to a survey by a reporter from Securities Times e Company, recycling outlets are basically in a virtual state, and OEMs lack motivation.
The crux of the problem lies in the misalignment of rights and responsibilities in the recycling chain.
Mo Ke said that although car companies are the main body of recycling, the ownership of the sold cars is in the hands of consumers, and consumers have the right to deal with the whereabouts of the batteries, which gives informal companies an opportunity because they produce compliance costs. Low, can come up with a higher purchase price.
"The specialty of car companies lies in the matching of vehicle manufacturing and systems. The links of battery production and supply, secondary utilization and recycling are the expertise of battery companies, but they are excluded from the recycling system; third-party recycling companies have strong technology. characteristics, but without mastering the resources, it is impossible to assume the responsibility of recycling the main body." Zhao Weiduo said.
In fact, regulatory efforts have been made to regulate the battery recycling industry.
Up to now, the Ministry of Industry and Information Technology has announced three batches of companies that meet the "Industry Standard Conditions for Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles", commonly known as the industry "white list", and the regular army has expanded to 47.
According to industry insiders, at present, representative battery factories and OEMs such as BYD, BAIC, SAIC, Ningde Times, Guoxuan Hi-Tech, as well as bus groups such as Shenzhen, Yangzhou, Hefei, etc., clearly require the recycling of decommissioned batteries and corner waste in bidding The bidders are companies in the "white list".
"At present, most of the documents issued by the state are guiding or recommending guidance documents, mostly self-discipline and regulation of the industry. They have a reference and guiding role for backbone enterprises with standardized operations, but for most small workshops, they have no binding effect. In this regard, Zhao Weiduo suggested that the regulations and standards for the recycling, transportation, and storage of waste power batteries should be upgraded, and the regulation of the industry should be strengthened to deter disorderly competition.
After the formation of industry norms, the market still needs to wait for the arrival of a larger wave of decommissioning.
According to the research report of Soochow Securities, it is estimated that the demand for lithium battery recycling will be 83GWh in 2022, and it will reach 1318GWh by 2035. If the metal price on February 9, 2022 is calculated, the industry market space will reach 294.6 billion yuan in 2035. The compound growth rate from year to 2035 is 18%.
The above-mentioned lithium battery analyst said that the quality of power batteries in the current recycling channel is still relatively low, and most of them are used in early electric buses and operating vehicles, and the metal content is not high.
When the number of retired batteries increases after 3 to 5 years, regular enterprises can rely on economies of scale to enjoy reasonable profits, and the industry pattern will naturally become clearer.