Big players "crazy scramble" for lithium hexafluorophosphate

Perhaps no other lithium battery material can make battery giants so crazy.

BYD has gone "crazy" about purchasing lithium hexafluorophosphate. On November 15, Dofluoro announced that the company had signed an agreement with Shenzhen BYD Supply Chain Management Co., Ltd. (hereinafter referred to as BYD Supply Chain Company). From January 2022 to December 2025, BYD Supply Chain Company will purchase a total of no less than 56,050 tons of lithium hexafluorophosphate products from Dofluoro.

Speaking of which, the purchasing volume is really scary.

56,050 tons, what does this mean? According to industry estimates, the production of 1GWh of lithium iron phosphate batteries requires about 125 tons of lithium hexafluorophosphate. Therefore, the 56,050 tons of lithium hexafluorophosphate purchased by BYD is expected to have a battery production capacity of about 448GWh. It should be noted that according to industry forecasts, the global power battery industry will enter the TWh era by 2025, and BYD alone will purchase "nearly half a TWh" of hexafluorophosphate.

Moreover, this is not the first time BYD has purchased lithium hexafluorophosphate from Dofluoro. In July this year, BYD signed a purchase contract with Dofluoro for no less than 6,460 tons of lithium hexafluorophosphate. In addition to purchasing from Dofluoro, in July this year, BYD also signed a purchase agreement with Jiujiujiu Technology, a holding subsidiary of Yan'an Bicon, which promised to supply BYD with no less than 1,150 tons between July and December 2021, no less than 3,360 tons in 2022, and no less than 3,360 tons in 2023.

In addition, BYD has also signed an agreement with Jiangsu Xintai Materials Technology Co., Ltd., a wholly-owned subsidiary of Tianji Shares, on the long-term supply of lithium hexafluorophosphate. The agreement stipulates that from July 2021 to December 2022, Xintai Materials will supply BYD with no less than 3,500 tons of lithium hexafluorophosphate, and 3,600 to 7,800 tons in 2023.

According to the orders in July this year, BYD purchased 25,630 tons of lithium hexafluorophosphate, and the corresponding battery production capacity is estimated to be about 205GWh. In addition to the 56,050 tons purchased from Do-Fluoride, BYD has purchased 81,680 tons of lithium hexafluorophosphate in the second half of this year, corresponding to a battery production capacity of about 653GWh. This shows how crazy BYD is.

In fact, BYD is not the only one crazy about hexafluorophosphate. "King Ning" has also been busy. As early as May this year, CATL signed an agreement with Ningde Kaixin, a wholly-owned subsidiary of Tianci Materials. By June 30, 2022, Ningde Kaixin will supply CATL with an estimated 15,000 tons of lithium hexafluorophosphate electrolyte products, and the corresponding battery production capacity is also at the 100GWh level.

On November 14, Yongtai Technology announced that CATL had acquired 25% of the equity of its holding subsidiary Yongtai Hi-Tech. In August this year, CATL signed an agreement with Yongtai Technology, whereby CATL will purchase lithium hexafluorophosphate, lithium bis(fluorosulfonyl)imide (LIFSI) and vinylene carbonate (VC) products from Yongtai Technology for a supply period of up to 5 years.

In addition to BYD and CATL, according to the announcement released by Dofluoro in July this year, Farasis Energy and Enchem Co., Ltd. signed purchase contracts with Dofluoro for no less than 1,700 tons and 1,800 tons of lithium hexafluorophosphate products respectively. On November 10, Enchem Co., Ltd. signed an agreement with Henan Nonferrous Metals, a subsidiary of Dofluoro, to supply it with lithium hexafluorophosphate products worth no less than 1 billion yuan within three years.

Hexafluoro prices will remain high

Behind the madness of battery giants is the continued booming new energy vehicle and power battery markets.

In September this year, domestic sales of new energy vehicles reached 357,000 units, a year-on-year increase of 148.4%; sales from January to September reached 2.157 million units, a year-on-year increase of 185.3%, setting a new record. Data from the Power Battery Application Branch showed that the installed capacity of power batteries in the Chinese market in September this year was about 15.86GWh, a year-on-year increase of 141.2%; the installed capacity from January to September this year was about 95.26GWh, a year-on-year increase of 178.8%.

Lithium hexafluorophosphate is currently the most widely used lithium salt electrolyte and the main component of lithium-ion battery electrolyte production, accounting for about 35% to 40% of the total cost of the electrolyte. Strong downstream demand has driven the price of lithium hexafluorophosphate to continue to soar. In November 2020, the price of lithium hexafluorophosphate was about 95,000 yuan/ton. Now the price of lithium hexafluorophosphate has reached about 600,000 yuan per ton, an increase of more than 500%; it has far exceeded the peak price of 400,000 yuan/ton in 2015.

Some industry analysts believe that the recent letter from BYD and other downstream battery manufacturers to adjust the battery prices in November may further increase the price of hexafluorophosphate in the short term. In addition, the upstream raw materials of lithium hexafluorophosphate are in short supply and high in price, so it is difficult to see the price ceiling for the time being. It is expected that the tension will continue in the first half of 2022 and will not be relieved to a certain extent until the second half of the year.

Supply gap will continue

Industry data shows that the current inventory of lithium hexafluorophosphate is at its lowest level in recent years, and the production capacity of major lithium hexafluorophosphate leaders is relatively limited. Among them, Tianci Materials has a liquid lithium hexafluorophosphate production capacity of 30,000 tons/year and a solid lithium hexafluorophosphate production capacity of 2,000 tons/year; Duofuduo's current production capacity is 10,000 tons/year; Tianji shares has a production capacity of 8,160 tons/year; Yongtai Technology has a production capacity of 2,000 tons/year and is currently expanding its production capacity by 6,000 tons; Yan'an Bicon's subsidiary Jiujiujiu Technology has a production capacity of 6,400 tons/year.

In addition, the production capacity of Hongyuan Pharmaceutical's shareholding subsidiary is 4,000 tons/year; the production capacity of the joint venture between Shanshan Co., Ltd. and Juhua Co., Ltd. is 2,000 tons/year; and the production capacity of Shenghua New Energy, a holding subsidiary of Shida Shenghua, is 2,000 tons/year.

At present, the production capacity of lithium hexafluorophosphate in the industry has basically been divided up by giants. Although most major manufacturers continue to operate at full capacity, there is still a shortage of supply. According to industry estimates, the supply gap of lithium hexafluorophosphate will be 17,000 tons in 2022, 35,000 tons in 2023, and more than 60,000 tons in 2024.

To fill the market gap, manufacturers are actively expanding production. In July this year, Dofluoro announced that it plans to invest 5.15 billion yuan to build projects with an annual output of 100,000 tons of lithium hexafluorophosphate, 40,000 tons of lithium bis(fluorosulfonyl)imide (LiFSI), and 10,000 tons of lithium difluorophosphate. A research report by Capital Securities pointed out that based on the current announcement, Dofluoro's production capacity is expected to reach 45,000 tons by the end of 2022, an increase of 200% compared to the end of 2021. The annual effective production capacity is expected to reach 25,000 tons, nearly doubling year-on-year.

It is understood that as the main source of Yongtai Technology's lithium hexafluorophosphate production capacity, Yongtai Hi-Tech currently has an annual production capacity of 2,000 tons of lithium hexafluorophosphate, and it is expected that its total lithium hexafluorophosphate production capacity will reach 8,000 tons by the end of 2021. In June this year, Yongtai Hi-Tech planned to invest 794 million yuan to build a 20,000-ton lithium hexafluorophosphate project. In October, Yongtai Technology adjusted the above project to an "annual production of 134,000 tons of liquid lithium salt industrialization project."

In addition, on June 17, Tianci Materials announced that the company plans to invest in the construction of a 150,000-ton lithium hexafluorophosphate project. On June 23, Tianji Shares announced that it plans to invest 600 million yuan to build a 10,000-ton lithium hexafluorophosphate project. Recently, Shida Shenghua announced that it will build a 100,000-ton/year liquid lithium hexafluorophosphate project; Shenzhen Xinxing plans to invest 700 million yuan to build a 15,000-ton lithium hexafluorophosphate project.

It is worth noting that although many manufacturers are currently expanding lithium hexafluorophosphate projects on a large scale, industry analysts point out that the production process of lithium hexafluorophosphate is relatively difficult and the environmental protection approval requirements are strict. Historically, the construction time of lithium hexafluorophosphate capacity is as long as 1.5 to 2 years, and the mismatch between supply and demand is difficult to solve by releasing capacity in the short term.