1、 Price trend
In 2023, the market for lithium iron phosphate continued to decline, showing a downward trend throughout the year. The price peaked at the beginning of 2023, with a price of 166000 yuan/ton and a low point at the end of December at 46000 yuan/ton, with a decline of 72.29% throughout the year. There was only a slight rebound in May, and the trend of lithium iron phosphate declined significantly in 2023. In the past two years, lithium iron phosphate seems to have experienced a roller coaster ride, and the entire industry has undergone earth shaking changes. Since the shortage of supply in 2021, With rapid development and oversupply by 2023, crowded enterprises, and intensified competition, what will happen to the lithium iron phosphate market in 2024?
2、 Review of the 2023 lithium iron phosphate market
Lithium iron phosphate prices first fell and then rose in the first half of the year
From the bar chart, it can be seen that in 2023, lithium iron phosphate experienced more decline than increase throughout the year, with only May and June showing an upward trend in the second quarter. The overall price in the first quarter fell by 39.76%, from 166000 yuan/ton at the beginning of January to 100000 yuan/ton by the end of March. The low decline in the second quarter slowed down, mainly due to the influence of upstream lithium carbonate. At the end of April, the supply of upstream raw material lithium mica was very tight, and the price of imported spodumene concentrate from overseas remained high, Lithium carbonate rebounded from its decline at the end of April, while lithium carbonate was in an upward trend. Lithium iron phosphate passively followed suit, although there was a slight rebound in April and May, driving up prices. However, the overall trend in the second quarter still showed a downward trend, with a decrease of 5%. The price dropped from 100000 yuan/ton in early April to 95000 yuan/ton at the end of June. The overall price of lithium iron phosphate fell by 42.77% in the first half of the year.
Lithium iron phosphate prices continue to decline in the second half of the year
In the second half of the year, lithium iron phosphate has shown a continuous downward trend, mainly due to the influence of upstream lithium carbonate. From the comparison chart between upstream and downstream, it can be seen that the price of lithium iron phosphate is closely related to upstream lithium carbonate. Lithium carbonate has plummeted sharply, and the cost side of lithium iron phosphate lacks strong support. In the third quarter, the price of lithium iron phosphate dropped from 95000 yuan/ton in early July to 70800 yuan/ton at the end of September, with an overall decline of 25.47%, The price of lithium iron phosphate in the fourth quarter dropped from 70800 yuan/ton in early October to 46000 yuan/ton at the end of December, with an overall decline of 51.58% in the second half of the year.
3、 Development Trends of Lithium Iron Phosphate in 2024
In terms of production capacity: by the end of 2022, the production capacity of lithium iron phosphate was 2.12 million tons, and by the end of 2023, the production capacity of lithium iron phosphate was 4.27 million tons. Sichuan region has a relatively high concentration of lithium iron phosphate production capacity, with Yuneng, Wanrun, Youshan, Germany, and Rongtong accounting for 60%. Currently, there is an overcapacity of lithium iron phosphate in various regions, with a clear trend and low operating rates. The main operating rates are concentrated in top enterprises. In 2023, lithium iron phosphate experienced overcapacity and low prices, Compressing costs and seizing market share, the investment heat is gradually entering a cooling off period, and there will be a significant cooling down in investment in lithium iron phosphate in 2024.
In terms of production growth rate: In 2023, the annual growth rate of production capacity was lower than expected, with growth rates of -40%, 61%, 19%, and -15% in the four quarters, respectively. The peak season of demand was in the 2.3 quarter, with a relatively fast growth rate, while the first and fourth quarters were relatively slow. In the first quarter, the domestic environment was mainly relaxed by clearing inventory, with upstream operating at a high level and downstream demand insufficient. In the second quarter, it entered the traditional peak season, and demand recovered. At the same time, the upstream price recovery drove the upward trend of lithium iron phosphate, In the third and fourth quarters, there was insufficient terminal demand, and the overall lithium iron phosphate market was sluggish. Weak inventories remained high, and consumption was slow. The industry’s pessimistic attitude was obvious.
In terms of imports: In the first half of 2023, the total import volume of lithium iron phosphate was 21.186 tons, and in the second half of the year, the import volume was 19.3 tons, with an annual import volume of about 40.4 tons. Due to the impact of upstream raw material prices and weak overall demand, the overall import volume significantly declined in 2023, and the import volume significantly decreased in the third quarter, mainly due to relatively saturated domestic supply, weak downstream demand, and less import demand.
In terms of exports: In the first half of 2023, the total export volume of lithium iron phosphate in China was 610.415 tons, and in the second half of the year, the export volume was about 554 tons. The annual export volume was about 1164 tons, with more exports in the first quarter and a slowdown in the second quarter. The reasons are: 1. High upstream raw material prices. 2. Some battery manufacturers have started to expand overseas, which has to some extent driven the export volume of lithium iron phosphate.
In terms of supply and demand: In 2023, the domestic supply of lithium iron phosphate is sufficient, and the tight supply situation has significantly eased. The total supply in 2023 reached 1.2 million tons, a year-on-year increase of 80%. In the past three years, the demand side of lithium iron phosphate has continuously released production capacity, and the industry has gradually shifted from supply shortage to oversupply. Currently, it is difficult for the lithium iron phosphate market to rise, and prices may maintain the current situation or continue to decline.
In summary, the production capacity of lithium iron phosphate in China has been in short supply since 2021, and the price has been rising all the way. By 2022, the demand for lithium iron phosphate was scarce, and the price continued to rise. At the end of 2022, the price of lithium iron phosphate reached a high market level, and the production capacity of lithium iron phosphate continued to increase. Too much new production capacity was invested, resulting in severe overcapacity. The built capacity is sufficient to meet the demand for the next 3-5 years, and the phenomenon of overcapacity is obvious. Secondly, driven by high profits, Numerous enterprises have joined the lithium iron phosphate industry, including not only new energy industry enterprises, but also emerging manufacturers who have entered and laid out lithium iron phosphate production lines, hoping to share a share of the new energy market. This phenomenon has caused congestion in lithium iron phosphate enterprises, increased competitive pressure, and lithium iron phosphate may continue to operate under pressure in 2024.
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