Why did it win Tesla and Ningde's long orders one after another？ ｜ Insight research

　　For two consecutive days, both Contemporary Amperex Technology Co., Limited and Tesla signed a long-term battery-grade lithium hydroxide supply agreement with Yahua Group.

　　The price of lithium has returned to the downward cycle, and the oversupply of lithium salt in the future has gradually become a market consensus. Why did Yahua Group get a long list of lithium salts from Tesla, a new energy automobile giant, and Contemporary Amperex Technology Co., Limited, a power battery leader?

　　And how many performance increments can these long orders bring to Yahua Group?

　　Within two days, Yahua Group received new long-term supply contracts from Tesla and Contemporary Amperex Technology Co., Limited.

　　These two battery-grade lithium hydroxide supply contracts, which last for 8 years and nearly 3 years respectively, have a transaction volume of 207,000 tons to 301,000 tons and 41,000 tons.

　　Previously, when the price of lithium was in a continuous upward trend, such long-term lithium salt contracts mostly agreed on the transaction amount. For example, Tesla, which was renewed this time, agreed to purchase battery-grade lithium hydroxide products with a total value of $630 million to $880 million when signing a long-term supply contract in the last round.

　　Nowadays, under the background of the overall downward trend of lithium price, the supply contract of lithium salt has also begun to change, from the amount to the scale to stipulate the transaction.

　　If the average quantity of the two orders is 295,000 tons and the latest price of lithium hydroxide is 260,000 yuan/ton, the transaction amount between Tesla and Contemporary Amperex Technology Co., Limited has reached about 76.7 billion yuan, which can bring about 11.8 billion yuan in operating income for Yahua Group on average every year.

　　Considering the price discount of Changxie, the final real operating income of Yahua Group may be reduced, but compared with Yahua Group's revenue of 14.46 billion yuan last year, these two long-term supply orders can still contribute to Yahua Group's performance flexibility.

　　Judging from the supply quantity, Yahua Group will supply 45,400 tons of battery-grade lithium hydroxide every year in the next three years, far exceeding the total sales volume of Yahua Group last year of 31,700 tons.

　　As we all know, the overseas battery market is still dominated by ternary lithium batteries, so the demand for lithium hydroxide by overseas power battery manufacturers and new energy vehicle companies continues to be at a high level.

　　In addition to Tesla and Contemporary Amperex Technology Co., Limited, LG New Energy and SK On, the top power battery manufacturers in the world in terms of installed capacity, and LG Chem also signed a three-year battery-grade lithium hydroxide supply contract with Yahua Group from 2023 to 2025, with the supply quantities of lithium hydroxide not exceeding 30,000 tons, 20,000 tons to 30,000 tons and 30,000 tons respectively.

　　Based on Yahua Group's capacity of 43,000 tons of lithium hydroxide last year, in fact, the output can no longer fully meet the demand for long orders. Fortunately, Yahua Group's 30,000-ton battery-grade lithium hydroxide production line of Ya 'an Lithium Industry Phase II was basically put into production at the beginning of this year, which can meet the long-term demand.

　　Overall, the lithium salt processing capacity of the three production bases of Yahua Group, Guoli, Xingsheng and Ya 'an, has increased to about 73,000 tons. At the same time, Yahua Group has officially opened the third phase of the high-grade lithium salt production line project with an annual output of 100,000 tons in Ya 'an base, which is progressing smoothly.

　　Judging from the capacity planning and long-term order signing of Yahua Group, the capacity of Yahua Group is basically planned according to the demand, and the production is covered by long-term orders, so the performance completion is highly certain.

　　Being able to win the favor of overseas manufacturers is actually closely related to Yahua Group's specialization in lithium hydroxide products. More than 80% of Yahua Group's production capacity is battery-grade lithium hydroxide, which is different from the plans of other domestic lithium salt competitors.

　　For Yahua Group's latest new capacity of 100,000 tons of lithium salt in Ya 'an Phase III, there will surely be lithium battery manufacturers or new energy vehicle companies willing to pay for it.