company news about The supply of lithium iron phosphate materials in the first half of the year is urgent, and the "rocket" expansion may lead to overcapacity next year

Since 2021, the installed proportion of lithium iron phosphate batteries in new energy vehicles has increased significantly, from 38% in January to 51% in July. For the first time in recent years, the installed proportion of lithium iron phosphate batteries in a single month has exceeded that of ternary batteries. The main reason also comes from the high energy density and mileage, high safety and high cost performance brought by the improvement of lithium iron phosphate battery technology.

In the second half of the year, the overall new energy market is still in a period of rapid development. In addition, after the rising price of nickel cobalt lithium metal, the cost advantage of lithium iron phosphate battery is prominent. Many new and old models increase the demand for lithium iron phosphate battery. The installed capacity of lithium iron phosphate battery is expected to continue to grow in the second half of the year.

                                        Installed capacity of power lithium iron phosphate from January to July 2021 (MWh)

With the rising demand downstream, the supply of lithium iron phosphate materials began to be urgent. Due to the rapid growth of market demand for lithium iron phosphate and the slow expansion of domestic lithium iron phosphate material enterprises, the existing capacity of many small and medium-sized enterprises is difficult to meet the power market demand, resulting in the shortage of overall effective capacity of lithium iron phosphate materials in the first half of the year.

According to the industry and SMM data, the output of power lithium iron phosphate battery from January to July 2021 was 47gwh, and the demand for lithium iron phosphate material was 124000 tons, while the actual output of power lithium iron phosphate material was 130000 tons. The supply of lithium iron phosphate material in the power market was relatively scarce. According to the monthly supply and demand balance of lithium iron phosphate materials in the figure below, since May this year, the lithium iron phosphate Market has continued to go to the warehouse, and many battery enterprises have also begun to purchase lithium iron phosphate materials everywhere to increase the number of suppliers and ensure the stable supply of raw materials.

Supply and demand balance of power lithium iron phosphate materials from January to July 2021 (ton)

Under the imbalance between supply and demand of lithium iron phosphate materials, many lithium iron phosphate enterprises also began to expand their production. For example, in the second half of 2021, German nano is expected to expand its production by 70000 tons, beiteri is expected to expand its production by 50000 tons, Yunneng is expected to expand its production by 50000 tons, Wanrun is expected to expand its production capacity of lithium iron phosphate materials by 363000 tons.

From the market demand for power, energy storage and small power in the second half of the year, the overall output of lithium iron phosphate material is expected to reach about 350000 tons this year. At present, the current capacity of lithium iron phosphate Market is 410000 tons. In addition, there are still more capacity to be released next year. After the rapid expansion of enterprises in the second half of this year, the lithium iron phosphate market may face overcapacity next year.