Research report on lithium hexafluorophosphate industry

Basic overview of the lithium hexafluorophosphate industry

Lithium hexafluorophosphate (LiPF6) is a kind of lithium-ion battery electrolyte and an important component of lithium-ion battery electrolyte. The main function is to ensure that the battery has sufficient lithium ions during the charging and discharging process to realize the charging and discharging cycle. Due to its relatively balanced solubility, electrochemical stability, electrical conductivity, high and low temperature performance, cycle life and other performance indicators, it has been widely used commercially.

The downstream market of lithium hexafluorophosphate is relatively single, and it is only used by electrolyte manufacturers. However, due to the different proportions of additives, additives and solvents, the applications of electrolytes are various. Different electrolytes will be manufactured into lithium-ion batteries with different properties according to their different properties, so the amount of addition will also be different. The electrolyte produced by lithium hexafluorophosphate is mainly used in the field of new energy vehicle power batteries, the field of consumer batteries of 3C electronics and the field of energy storage batteries.

The development history of lithium hexafluorophosphate

The development of lithium hexafluorophosphate can be divided into three stages:

● Before 2009: In the early stage of industry development, imports were the mainstay

Before 2009, due to the high difficulty of synthesizing lithium hexafluorophosphate, the entire production process involved high and low temperature, anhydrous and oxygen-free operation, purification, and corrosion resistance, which required high equipment and operators and was extremely difficult to process. China’s lithium hexafluorophosphate needs to be imported in large quantities, and it is mainly obtained from Japanese manufacturers. At that time, the selling price of more than one million yuan also stimulated Chinese enterprises to invest in the industrialization research of lithium hexafluorophosphate.

● 2010-2019: A period of accelerated industry development

After 2010, some Chinese manufacturers broke through the technological monopoly of commercial production and achieved substantial growth in production capacity, which led to an increase in the localization rate of lithium hexafluorophosphate. In the following years, with the development of the entire industry, China’s domestic substitution was gradually completed. In 2012, the 1,000-ton first phase of the 2,000-ton lithium hexafluorophosphate Project was put into production.

Since then, domestic enterprises such as Jiangsu Xintai and Tinci Materials have put into production thousands of tons of production capacity. At present, China’s lithium hexafluorophosphate is partially exported while completing its localization, and the export proportion has increased from 18.52% in 2018 to 25.42% in 2020. This ratio is expected to increase further as global demand continues to grow. From the perspective of the global market, China is the main producer of lithium hexafluorophosphate in the world, and the hexafluoride production of Chinese enterprises accounts for more than 60-70%.

● 2020-present: Industry maturity, capacity acceleration and export acceleration

In the second half of 2020, with the recovery of demand for new energy vehicles and the long-term low price of lithium hexafluorophosphate, the main manufacturers have insufficient inventory. In addition, the sudden epidemic also caused manufacturers to expand production in a timely manner, the overall industry supply and demand tightened, and prices continued to rise. At the same time, with the increase in the penetration rate of new energy vehicles driven by the dual carbon goal and the expectation of explosive growth in downstream demand, China’s leading companies are expected to seize the industry opportunities and have announced large-scale production expansion plans.

As the development of the industry enters a mature stage, the scale of lithium hexafluorophosphate in China will be further increased, and the production cost will also have room for further reduction. In terms of application, although lithium hexafluorophosphate has disadvantages such as poor thermal stability and sensitivity to moisture, many companies are currently developing and even launching new lithium salts to improve the characteristics of batteries, but it is not enough to shake the status of lithium hexafluorophosphate.

Competitive landscape of lithium hexafluorophosphate industry

At present, in the lithium hexafluorophosphate industry, only DFD and Tinci are in the first echelon, and the rest of the manufacturers are in the second echelon. With the market boom, many companies have increased their deployment of lithium hexafluorophosphate since 2021. According to statistics, DFD, Tinci, Tonze, Shanshan, etc. all have plans to expand production capacity, with a total planned new production capacity of 382,000 tons. But it is worth noting that the demand for lithium hexafluorophosphate is expected to reach 365,600 tons in 2025. That is, in the long run, there is indeed a risk of excess production capacity according to the current plan.

DFD products involve the production and development of high-performance inorganic fluorides, electronic chemicals, lithium-ion batteries and related materials. From the point of view of profitability, since 2012, the gross profit rate and net profit rate of DFD have fluctuated greatly, and the cycle attribute is strong, which is basically consistent with the high and low points of the price cycle of lithium hexafluorophosphate. However, unlike 2016, DFD has adopted the long-term single mode to lock in the performance of major customers.

In 2005, based on the company’s daily chemical material technology, Tinci as one of the top 10 lithium ion battery electrolyte company, began to deploy the lithium-ion battery electrolyte market. In 2011, the company realized the self-produced and self-developed electrolyte material lithium hexafluorophosphate, cut into the CATL and ATL supply chain, and became a leading electrolyte enterprise in China.

From the perspective of profitability, since 2012, Tinci’s gross profit margin and net profit margin have fluctuated considerably. However, relative to DFD, cyclical volatility is slightly better. Different from the DFD model, Tinci’s vertically integrated business layout is more obvious. In the upstream, lithium salt solutes and various additives based on lithium hexafluorophosphate and lithium bisfluorosulfonimide are the main positions, and EMC and DMC electrolyte solvents are attached.

Future prospect of lithium hexafluorophosphate industry

In the short term, with the production capacity of leading enterprises, the price correction of lithium hexafluorophosphate exceeds market expectations. According to previous feedback from leading companies and institutional investors, most companies do not expect price adjustments until the second half of 2022. However, due to the epidemic and the monthly performance disturbances of new energy vehicles and battery factories, the price of lithium hexafluorophosphate has been relatively high, and the retracement has reached more than 50%.

In the medium and long term, there is already a certain risk of excess capacity in nominal capacity planning. Although planning production capacity and landing production capacity planning are two different things, in any case, the current price of lithium hexafluorophosphate is still as high as nearly 300,000/ton. For the second-tier manufacturers and other cross-border manufacturers, they are still highly attractive, and the competition for lithium hexafluorophosphate capacity expansion has begun.

From the perspective of competing products, the new lithium salt bisfluorosulfonimide lithium salt (LiFSI) is a new type of electrolyte solute, and its high and low temperature performance, electrical conductivity and thermal stability are better than lithium hexafluorophosphate. However, due to the high cost and the corrosion of aluminum foil by chloride ion impurities, lithium hexafluorophosphate has not been replaced at present. However, leading companies have begun to deploy this product, and the replacement process of lithium hexafluorophosphate in the later stage is worthy of attention.

Finally, and most importantly, lithium hexafluorophosphate is the key raw material for the electrolyte, with a high cost ratio, accounting for about 44%. As the core basic material of power battery, electrolyte accounts for 8-9% of the cost of power battery. Therefore, the price of lithium hexafluorophosphate will be pulled back, and electrolytes, battery factories and new energy vehicle companies will all benefit significantly.