PVDF is mainly used as cathode binder and separator coating material in lithium batteries. The addition of PVDF accounts for 3.5% and 1.5% of the demand for LFP cathode materials and ternary cathode materials, respectively. The increase in power battery shipments will directly drive the growth of PVDF market demand. As the downstream market continues to heat up, the gap between the supply and demand of lithium battery PVDF continues to widen, the production capacity of the superimposed raw material R142b is constrained, and the market supply is seriously insufficient. Since 2021, the price of lithium battery PVDF has been rising.
1.The growth of power battery shipments drives the outbreak of PVDF market demand
In the first half of 2022, the price of lithium battery-grade PVDF once rose to more than 500,000 RMB/ton, an increase of more than 400% from the price of 110,000 RMB/ton at the beginning of 2021. The market quotation of its main raw material R142b also exceeded 200,000 RMB / ton, with an annual cumulative increase of more than 10 times. Data shows that in the first half of 2022, China's power battery shipments exceeded 200GWh, a year-on-year increase of more than 150%. Among them, the shipment of LFP power battery exceeded 110GWh, which led to the shipment of 410,000 tons of LFP cathode materials, a year-on-year increase of 130%.
It is expected that due to the limited production capacity of PVDF for lithium batteries in China, and the fact that ordinary PVDF production capacity cannot be converted into lithium battery grade PVDF in a short period of time, the construction of superimposed raw material R142b is strictly controlled and slow to expand production, resulting in slow release of new production capacity of lithium battery PVDF production capacity in China, and a supply gap that is difficult to make up in the short term. With the further increase in sales of new energy vehicles in the second half of the year, the lithium battery PVDF market is expected to maintain a high prosperity in 2022, which will support PVDF prices and boost PVDF companies' annual performance to further increase.
2.Numerous companies actively invests in the construction of PVDF projects
Under this circumstance, companies including LECRON SHARE, DFD, SINOCHEM, PUTAILAI, DONGYUE FEDERATION, JUHUA, HAOHUA TECHNOLOGY, 3F, Flurine, DEYI, STA, ZX, Yonghe Refrigerant, CYPRESS, Lee & Man Chemical are actively investing in construction PVDF projects are competing for the layout of the lithium battery PVDF industry. At the same time, in order to ensure stable supply of raw materials and maintain stable prices, leading power battery companies including some of the top 10 power battery companies in the world are also locking in PVDF supply capacity by signing long supply orders. In order to speed up the large-scale introduction of domestic PVDF in China, it will provide guarantee for the expansion of PVDF enterprises.
3.LECRON SHARE's annual results and profits achieved further growth
On August 9, 2022, LECRON SHARE released the 2022 semi-annual report, the company achieved revenue of 1.194 billion RMB in the first half of the year, a year-on-year increase of 63.02%; The net profit attributable to the parent was 673 million RMB, a year-on-year increase of 1325.58%. The main reason is that the sales unit price of the company's main products increased compared with the same period of the previous year and the sales revenue of the new product PVDF was realized. Among them, the subsidiary HUAN achieved revenue of 935 million RMB and net profit of 597 million RMB, and its main products are lithium battery grade PVDF products.
In December last year, LECRON SHARE signed a "Cooperation Framework Agreement" with CATL, and CATL purchased lithium battery grade PVDF and R142b products from the company. The agreement is valid until December 31, 2024. CATL guarantees that the annual purchase of HUAN lithium battery grade PVDF is 80% of the total annual PVDF output. Among them, the total purchase volume of R142b by the end of December 2021 shall not be less than 1,700 tons; in 2022, it shall not be less than 7,200 tons. Based on 1.8-2 tons of PVDF (2-2.3 tons if recycling is not considered), 7200 tons of R142b can produce 3600-4000 tons of PVDF, corresponding to about 72-80GWh of power batteries.
In March 2022, LECRON SHARE announced that its subsidiary HUAN officially entered the CATL supply chain system, mainly providing lithium battery-grade PVDF products for CATL and its affiliates. This means that LECRON SHARE has officially started to supply lithium battery PVDF products in batches to CATL, which ranks first among the top 10 lithium battery companies in the world, providing guarantee for its annual performance and profit growth. In addition to LECRON SHARE, companies including HEC, JUHUA, SANMEI and other companies also benefited from the growth of PVDF market demand and achieved performance growth.
SANMEI predicts that the net profit attributable to the parent in the first half of the year is 297 million RMB to 372 million RMB, a year-on-year increase of 110.54% to 163.17%. Mainly due to "the increase in demand for downstream products PVDF, the price of the company's product HCFC-142b increased year-on-year". In the first half of the year, the net profit attributable to the parent company of HEC was 624 million RMB, a year-on-year increase of 646.16%. Among them, the joint venture company HEC fluororesin benefited from the continuous rise in the price of PVDF and the strong market demand, and the performance increased significantly, which made the company's investment income increase and promoted the company's overall profit level to increase significantly.
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