The Zhitong Finance App learned that Dongwu Securities released a research report saying that the price of hexafluoride fell below the low price point in the previous round, the price of loose orders had already fallen below 60,000 yuan/ton, and second-tier hexafluoride manufacturers basically lost money. The bank said that considering that the price of hexafluoride has fallen to the cash cost line of second-tier hexafluoroethylene plants, the leading companies are all willing to raise prices. Marginal supply contraction is expected to bring price elasticity. The price of hexafluoride is expected to rebound to around 70,000 yuan/ton. First, it promotes divine materials (002709.SZ), which has an obvious cost advantage and a stable leading position, and secondly, it is optimistic about second-tier leaders with good profit elasticity after the price rebound. Focus on polyfluoride (002407.SZ) and Skyrim (002759.SZ).

The views expressed by Dongwu Securities are as follows:

The price of hexafluoride fell below the low price point in the previous round. The price of loose orders has already fallen below 60,000 yuan/ton, and second-tier hexafluoroethylene manufacturers have basically lost money.

The price of hexafluoride has gone through two major cycles in history. The price of hexafluoride began to fall below 150,000 yuan/ton in '17. The price of hexafluoride fell below the leading cost price in 20 years, and continued to fluctuate at the bottom for about a year. The lowest price fell below 70,000 yuan/ton. After the implementation of new production capacity in the 22-year production expansion cycle, the price of hexafluoride began to fall all the way down. The latest price of 66,500 per ton fell below the low of the previous round, and the price of loose orders had already fallen below 60,000 yuan/ton in early March, and second-tier hexafluoride manufacturers basically lost money.

Tianci stopped production and maintenance, and the supply of the industry improved marginally.

Tianci plans to overhaul the production capacity of 30,000 tons of liquid hexafluoride (10,000 tons reduced) per year. The maintenance capacity accounts for about 5% of the industry's production capacity, corresponding to an annual electrolyte production of about 80,000 tons. After the production reduction, we expect the industry's supply and demand pattern to improve. We expect the profit per unit of Tianci electrolyte to drop to nearly 20,000 yuan in 24Q1 (corresponding to profit of 1-15,000 yuan/ton per unit of hexafluoride). We expect the profit of the 6F unit of polyfluoride to be 0-50,000 yuan/ton. Skyrim will be marginally profitable, and second-tier and third-tier manufacturers will lose money. Currently, Tianci, Polyfluoride, and Skyrim's production capacity accounts for 70% of the industry's production capacity. If only the three companies and overseas production capacity are taken into account, they can basically meet demand in 24 years. There is a certain gap between supply and demand in 25 years, and the entire industry's loss situation is unsustainable. Currently, the leaders are willing to raise prices, and we expect to drive the price rebound of hexafluoride prices.

Driven by rising prices and rising lithium carbonate, the price of hexafluoride is expected to rebound 10-15% from the bottom to around 65,000 yuan/ton.

Currently, leading manufacturers are strongly willing to raise prices, and late-stage manufacturers are unable to fight the price war. With the marginal improvement in the supply and demand pattern driven by the discontinuation of production by Tianci, we expect processing costs that had previously fallen slightly to recover slightly, compounded by lithium carbonate price increases, and hexafluoride prices are expected to rebound to around 65,000/ton in the short term, up 10% to 15% from the bottom.

Considering that the rebound in hexafluoride is driving up processing costs, electrolytes and hexafluoroethylene companies are profitable.

The price of hexafluoride has bottomed out. If we consider that the price of hexafluoride rises to 65,000-70,000 yuan/ton, the corresponding increase in processing costs is about 20,000 yuan/ton. The profit flexibility for leading companies such as Tianci, Polyfluoride, and Skyrim is high. We expect Tianci's unit profit to rise to 1.2 billion yuan in 24, and close to 2 billion yuan in 25.

Risk warning: Policies fall short of expectations, price competition exceeds market expectations, raw material prices are unstable, affecting profit margins.