Two days in a row, Ningde Times and Tesla both signed a long-term battery-grade lithium hydroxide supply agreement with Yahua Group.
Lithium prices have returned to a downward cycle, and the future supply of lithium salt is also gradually becoming a market consensus. Why was Yahua Group able to get a long list of lithium salts from the NEV giant Tesla and the power battery leader Ningde era?
And how much increase in performance can these long orders actually bring to Yahua Group?
In just two days, Yahua Group received a new long-term supply contract with Tesla and Ningde Era.
The two battery-grade lithium hydroxide supply contracts, which are 8 years long and nearly 3 years respectively, have traded volumes of 207,000 tons to 3.01 million tons and 41,000 tons.
Previously, when lithium prices continued to rise, such long-term lithium salt contracts mostly agreed on transaction amounts. For example, Tesla, which was renewed this time, agreed to purchase battery-grade lithium hydroxide products with a total purchase value of 630 million US dollars to 880 million US dollars when signing long-term supply contracts in the last round.
Now, against the backdrop of an overall downward trend in lithium prices, the supply contract for lithium salt has also begun to change, shifting from amount to scale to agreeing on transactions.
If we calculate the average number of two orders of 295,000 tons and the latest lithium hydroxide price of 260,000 yuan/ton, the amount of these two transactions in the Tesla and Ningde era has already reached about 76.7 billion yuan. On average, each year, they can bring about 11.8 billion yuan in operating income to Yahua Group.
Considering Changxie's price discounts, the final actual operating income of Yahua Group may have decreased, but compared with Yahua Group's revenue of 14.46 billion yuan last year, these two long-term supply orders can still contribute a lot to Yahua Group's performance flexibility.
Judging from the supply volume, with these two long-term supply orders alone, Yahua Group will have to supply 45,400 tons of battery-grade lithium hydroxide every year for the next 3 years, far exceeding Yahua Group's total sales volume of 31,700 tons for the whole of last year.
As we all know, the overseas battery market is still dominated by ternary lithium batteries, so overseas power battery manufacturers and new energy vehicle companies also continue to have high demand for lithium hydroxide.
In addition to the Tesla and Ningde era, the world's top power battery manufacturers LG New Energy and SK On, and LG Chem have also signed a three-year battery-grade lithium hydroxide supply contract with Yahua Group from 2023 to 2025. The supply volume of lithium hydroxide is no more than 30,000 tons, 20,000 tons to 30,000 tons, and 30,000 tons, respectively.
Based on Yahua Group's 43,000 tons of lithium hydroxide production capacity last year, in fact, production volume can no longer fully meet the demand for long orders. Fortunately, Yahua Group's Ya'an Lithium Phase II 30,000-ton battery-grade lithium hydroxide production line was basically put into operation at the beginning of this year, which can meet the demand for long orders.
Overall, the combined lithium salt processing capacity of Yahua Group's three production sites, Guoli, Xingsheng, and Ya'an, has increased to about 73,000 tons. Meanwhile, Yahua Group has also officially started the construction of the third phase of a high-grade lithium salt production line project with an annual output of 100,000 tons at the Ya'an base, which is currently progressing smoothly.
Judging from the Yahua Group's production capacity plans and the signing of long-term orders, Yahua Group's production capacity is basically planned according to demand. Once production is put into operation, it is covered by long orders, and there is a high degree of certainty that performance will be completed.
However, being able to gain popularity from major overseas manufacturers is also closely related to Yahua Group's specialty lithium hydroxide products. Over 80% of Yahua Group's production capacity is battery-grade lithium hydroxide, which is also different from the plans of other domestic lithium salt competitors.
As for Yahua Group's latest Ya'an Phase III new production capacity of 100,000 tons of lithium salt, there will probably also be lithium battery manufacturers or new energy vehicle companies willing to pay for it.