Yongxing Special Materials Technology Co.,Ltd (002756.SZ): 5 FORCES Analysis [Dec-2025 Updated]

Assessing Yongxing Special Materials (002756.SZ) through Porter's Five Forces reveals a company fortified by vertical integration and technical know‑how yet squeezed by powerful EV battery buyers, intense rivalry in an oversupplied lithium market, rising substitute technologies and recycling, and high regulatory and capital barriers that both protect and pressure future growth-read on to see how each force shapes Yongxing's strategic choices and risks.

Yongxing Special Materials Technology Co.,Ltd (002756.SZ) - Porter's Five Forces: Bargaining power of suppliers

Upstream mineral self-sufficiency materially reduces supplier bargaining power for Yongxing Special Materials. As of late 2025 the company maintains a high self-sufficiency rate for lithium via its lepidolite mines in Jiangxi, supplemented by internal mineral processing capacity recently enhanced to 1.8 million tonnes per year. This vertical integration shields the company from external spodumene concentrate price volatility (spot spodumene ~ $810-$840/tonne in Oct 2025) and lithium carbonate spot swings (over 17% intramonth volatility in Nov 2025). The company reported raw material costs of CNY 6,640.54 million for full-year 2024, illustrating the scale of in-house feedstock management and the effective neutralization of bargaining leverage from large global miners such as Albemarle and SQM over non-integrated peers.

Supplier concentration remains, however, in the special steel and alloying inputs. The stainless steel business requires nickel-based alloys and high-purity iron ore sourced from a limited pool of qualified suppliers. In the broader Chinese steel context raw material costs represent roughly 60%-70% of production costs, and Yongxing reported total expenditure excluding depreciation of CNY 7,115.50 million in 2024, a substantial portion attributable to these metal inputs. The company's market position as a leading stainless steel rod and wire producer generates volume-based negotiating leverage against commodity suppliers, but the small number of high-quality alloy suppliers preserves moderate supplier power on price and delivery terms.

• Raw-material dependence: high for nickel, high-purity iron ore (top 5 suppliers constitute large share).
• Exposure: raw materials represent ~60%-70% of steel production costs (industry benchmark).
• Company procurement spend (ex-depreciation, 2024): CNY 7,115.50 million.

Energy and power costs act as a constrained, non-negotiable supplier input. Industrial electricity for stainless steel production and lithium refining is procured from state-owned utilities under largely fixed/regulatory pricing, making Yongxing a price-taker. The company reported manufacturing expenses of CNY 13.25 million for 2024 (note: this excludes embedded energy components in raw material processing), and net income was CNY 1,043.47 million in 2024, indicating limited margin buffer against utility price hikes. Rising global industrial electricity demand (data centers, AI) exerts upward pressure on domestic rates; the paucity of alternative large-scale power providers in the domestic market constrains the company's ability to negotiate energy costs.

Technological and equipment suppliers exert specialized leverage due to proprietary pyrometallurgical and hydrometallurgical technologies required for battery-grade lithium carbonate and high-efficiency stainless steel. Yongxing raised CNY 1.1 billion to expand battery-grade lithium carbonate capacity by 20,000 tonnes/year, necessitating advanced equipment from a concentrated pool of domestic high-tech vendors (further constrained by Chinese export controls tightened as of July 2025). These vendors often supply multi-year service and maintenance contracts, generating vendor lock-in and project-level bargaining power. The company's capital expenditure over the last 12 months registered at -CNY 185.32 million, a figure reflecting ongoing CAPEX commitments to these specialized equipment suppliers for projects including a 2GWh advanced battery plan.

• CAPEX (last 12 months): -CNY 185.32 million (directed toward high-tech equipment partners).
• Funds raised for expansion: CNY 1.1 billion (20,000 tpa battery-grade Li2CO3 increase).
• Vendor dynamics: concentrated domestic high-end equipment suppliers, multi-year service contracts, lock-in risk.

Net effect: supplier power is heterogeneous-materially reduced for lithium via vertical integration, moderate for specialty alloy suppliers due to concentration, high for energy utilities due to regulatory market structure, and moderate-to-high for advanced equipment vendors due to technological lock-in and service dependencies.

Yongxing Special Materials Technology Co.,Ltd (002756.SZ) - Porter's Five Forces: Bargaining power of customers

Downstream concentration in the EV battery sector grants major manufacturers significant pricing leverage over lithium suppliers. Yongxing supplies lithium products to large battery makers such as CATL and BYD, which together controlled over 50% of the global battery market in 2025. These buyers leverage massive procurement volumes to demand lower prices, contributing to a decline in battery-grade lithium carbonate prices to approximately CNY 72,500 per tonne in late 2025. The company's revenue declined from CNY 12,189.01 million in 2023 to CNY 8,073.83 million in 2024, largely attributable to pricing pressure from dominant customers. With the average EV battery pack price in China falling to $94/kWh in 2025, battery makers passed cost-reduction requirements directly up the supply chain. Yongxing's lithium carbonate is a standardized commodity, increasing buyer substitutability and bargaining power.

The following table summarizes key lithium-related commercial and financial metrics illustrating buyer pressure:

Diverse end-user base in the special steel segment mitigates customer power through market fragmentation. Yongxing's stainless steel rod and wire products serve aerospace, shipbuilding, defense, and oil exploitation, preventing any single client from dominating orders. In 2024 the company reported sales of CNY 8,020.86 million from the steel-related operations, supported by many industrial clients rather than a few large accounts. This diversification helped maintain a gross margin of 16.36% in the steel segment, relatively stable versus the volatile lithium business. Although domestic steel demand softened-Chinese steel production was projected to shrink ~5% in 2025-the technical differentiation of Yongxing's specialized products reduces substitutability and limits the negotiating power of individual industrial customers.

Key steel-segment metrics:

• Steel-related sales (2024): CNY 8,020.86 million
• Steel gross margin (latest reported): 16.36%
• Projected Chinese steel production change (2025): -5%

Export market volatility and trade barriers limit bargaining position with international buyers. As of 2025, Chinese steel exporters faced increased tariffs and safeguard measures-examples include a 50% tariff increase in the US and new restrictions from the EU and India-forcing Yongxing to redirect exports toward emerging markets such as Southeast Asia and the Middle East. Although exports rose 9% in H1 2025, the shift to more price-sensitive markets compressed margins. The company's net profit margin declined to 8.18% over the last 12 months, reflecting the squeeze from constrained trade channels and heightened competition from other low-cost producers in redirected markets. International buyers in these regions exhibit high switching propensity, further eroding Yongxing's ability to command premiums.

International trade and profitability indicators:

Long-term supply contracts provide volume stability but often include buyer-favorable price-adjustment clauses. Many multi-year offtake agreements with battery manufacturers peg prices to market indices; lithium carbonate futures were around CNY 94,400/T by December 2025. These clauses limit Yongxing's ability to capture price spikes and expose it to downside during market corrections. The company's basic earnings per share declined from CNY 6.33 to CNY 1.97 in 2024, highlighting that contract structures did not shield profitability during the lithium price correction. Consequently, while contracts ensure guaranteed volumes, their index-linked pricing terms keep final pricing power largely in the hands of the buyers.

Contractual and risk metrics:

• Typical contract type: multi-year offtake with index-linked price adjustment
• Li2CO3 futures benchmark (Dec 2025): CNY 94,400/tonne
• Basic EPS change (2023→2024): CNY 6.33 → CNY 1.97
• Effect on revenue from buyer pricing pressure (2023→2024): -33.7% (CNY 12,189.01m → CNY 8,073.83m)

Yongxing Special Materials Technology Co.,Ltd (002756.SZ) - Porter's Five Forces: Competitive rivalry

Competitive rivalry in Yongxing Special Materials' core businesses is intense and multifaceted, driven by global oversupply in lithium carbonate, concentrated high-end competition in special steels, widespread vertical integration, and rapid technological shifts in battery chemistries. Price pressure, capacity expansions by large peers, and new low-cost entrants have materially compressed margins and revenues through 2024-2025.

In the lithium carbonate segment, persistent global oversupply has produced fierce price competition. As of late 2025 spot prices for battery-grade lithium carbonate were approximately CNY 72,500/tonne despite some production curtailments. Large-scale capacity targets by competitors have directly pressured volumes and pricing for Yongxing.

Key dynamics amplifying rivalry in lithium:

• Capacity expansion by global giants (e.g., Ganfeng, SQM) increasing supply.
• New low-cost mine and processing projects in Africa/Indonesia reducing average global costs.
• Price-driven substitution and inventory destocking by battery & cathode makers.
• Margin compression leading to competitive price offers to preserve market share.

The special steel segment-stainless steel rod and wire-sees competition concentrated on high-end niche specifications where Yongxing competes strongly domestically but faces pressure from specialized Chinese mills and international players. Domestic steel production is forecast to decline ~5% in 2025 due to the real estate crisis, sharpening competition for the remaining demand in infrastructure and manufacturing.

Drivers of rivalry in the steel business include:

• Focus on technical specifications and quality differentiation rather than only price.
• Utilization pressure on high fixed-cost assets causing periodic price concessions.
• Bidding competition for infrastructure and industrial OEM contracts.

Vertical integration is now largely table stakes rather than a sustainable differentiator. Most major lithium rivals pursue ≥70% raw material self-sufficiency to survive low-price cycles. Yongxing expanded its mining capacity target from 3 million to 9 million tons by late 2024; competitors like Gotion Yichun are aiming for similar upstream scale by 2025, generating an "arms race" in resource control.

Implications of parity in vertical integration:

• Competition shifted to operational efficiency and lowest cost per ton.
• Capital intensity raises breakeven volumes, pressuring smaller/cash-poor players.
• Balance-sheet strength determines ability to endure extended low-price periods.

Technological innovation in battery chemistries is reshaping competitive positions. Rivals are diversifying into lithium hydroxide, advanced cathode materials, and alternative chemistries. Yongxing invested CNY 1 billion in a 2 GWh advanced battery project-targeting lithium titanate and square aluminum shell batteries-to hedge against carbonate commoditization. However, rapid moves by larger peers into next-generation chemistries (e.g., CATL's second-generation sodium-ion launches in 2025) could reduce long-term demand growth for conventional lithium products.

Key competitive pressures from technological change:

• Need to diversify product mix to higher-value chemistries (LiOH, advanced cathodes).
• R&D and capex intensification to keep product roadmap relevant.
• Market risk from disruptive chemistries (e.g., sodium-ion) that could reduce lithium demand growth.

Yongxing Special Materials Technology Co.,Ltd (002756.SZ) - Porter's Five Forces: Threat of substitutes

Sodium-ion batteries present an immediate and quantifiable substitution risk to Yongxing Special Materials' lithium carbonate revenue. As of 2025 CATL and BYD have launched dedicated sodium-ion brands and production lines targeting economy EVs and stationary storage. Sodium-ion cell production costs are currently estimated at 30%-40% lower than comparable lithium-ion cells due to the use of abundant sodium and aluminum instead of lithium and copper. Lithium-ion retained a 64% share of the battery market in 2025, but rapid sodium-ion adoption in micro-EVs directly reduces demand for lithium carbonate used in entry-level packs. Scenario analysis: if sodium-ion captures 10% of the entry-level EV market, downward pressure on lithium carbonate prices could be severe, materially reducing Yongxing's resin/carbonate revenue given its sensitivity to volume and price shifts.

Lithium Iron Phosphate (LFP) chemistry continues to structurally alter demand composition. LFP's global EV battery market share rose to approximately 37% in 2025 (from ~25% in 2022) driven by lower cost and safety advantages; Chinese average EV battery-pack price reached $94/kWh, with LFP ~25% cheaper than NCM options. Yongxing supplies lithium carbonate used in LFP production, but the LFP shift has reduced demand for high-purity lithium hydroxide-more relevant to NCM/NCA chemistries-commoditizing carbonate sales as LFP makers are highly price-sensitive and able to switch suppliers easily. Yongxing's near-term financials illustrate exposure: net income fell nearly 70% in 2024, reflecting margin compression and volume/pricing headwinds from chemistry shifts.

Solid-state batteries constitute a medium- to long-term technological substitute with potential to change raw-material specifications. Research acceleration and automaker pilots targeted for 2026-2027 mean material requirements could shift away from current lithium carbonate/refining inputs toward lithium metal, sulfide/oxide solid electrolytes, or novel conductors. While not mass-market in 2025, the market's anticipation is already reflected in a P/E ratio of 23.31 for Yongxing, signaling investor caution about the longevity of incumbent lithium-ion demand. A breakthrough in solid-state energy density or manufacturability could prompt major customers to pivot, reducing forecastable lifetime demand for current products.

Recycled lithium (secondary supply) is an increasingly viable substitute and competitive pressure point. China's dominance in cell manufacturing (~85% control of production in 2025) extends to recycling infrastructure, enabling recycled lithium carbonate to meet battery-grade specifications and satisfy OEM ESG targets. The growth of end-of-life EV batteries increases secondary lithium supply, which is less dependent on mining permits and constrained quotas-notably important given tightening environmental rules in Jiangxi. Urban mining offers a lower carbon footprint and potentially lower marginal costs, directly competing with Yongxing's lepidolite-derived primary production.

• Recycling capacity concentration: China ~85% of cell manufacturing and recycling infrastructure (2025) - accelerates secondary supply growth.
• Regulatory trend: stricter Jiangxi mining/environmental quotas raise primary production costs and limit expansion.
• Cost/pricing dynamic: recycled lithium parity with battery-grade specs reduces OEM dependency on mined carbonate.
• Strategic exposure: Yongxing faces substitution from sodium-ion, LFP shifts, solid-state prospects, and recycled lithium concurrently.

Yongxing Special Materials Technology Co.,Ltd (002756.SZ) - Porter's Five Forces: Threat of new entrants

High capital requirements for vertical integration serve as a major barrier to new competitors. Establishing a complete industry chain from lepidolite mining to battery-grade lithium carbonate refining requires multibillion-yuan upfront investment. Yongxing's recent CNY 1.1 billion fundraising for a single 20,000-ton expansion project (announced 2024-2025) illustrates the scale of capital needed to be competitive. Industry estimates indicate a full-process plant (mining → mineral processing → refining to battery-grade carbonate/hydroxide) for 50,000 tpa of carbonate-equivalent can require CNY 3-8 billion in capex depending on ore type and automation level.

The company's balance sheet further raises the entry bar: net cash position of CNY 7.97 billion (latest reported) plus existing fixed assets and production facilities limit vulnerability to cash squeezes that typically force smaller entrants to exit when prices fall. Market prices that have dropped below CNY 75,000/tonne for lithium carbonate (spot) create an environment where only producers with large-scale, low-cost operations can achieve sustainable margins. Without significant financial backing, new players cannot achieve the economies of scale necessary to survive.

Technical expertise and proprietary processing methods create significant barriers for newcomers. Refining lithium from lepidolite is materially more complex than processing spodumene or brine: lepidolite requires specialized roasting, acid leaching, impurity removal (e.g., fluorine, iron, manganese) and multi-stage crystallization to reach battery-grade lithium carbonate/hydroxide with acceptable impurity profiles. Yongxing has developed decades of process know-how, pilot data, and plant-scale recipes that drive both recovery rates and product purity.

• Regulatory/tech control: As of July 2025 China imposed export restrictions on certain lithium processing technologies, including lithium carbonate and hydroxide preparation methods, limiting foreign access to licensed know-how.
• Performance: Yongxing maintained a gross margin of 16.36% in a down market, reflecting process efficiency and cost control that new entrants would have difficulty matching.
• R&D and IP: Years of iterative optimization, proprietary reagents and process control software increase conversion efficiency and reduce reagent consumption-factors that materially affect unit economics.

Strict environmental regulations and land quotas in Jiangxi and other provinces constrain expansion of new mining and processing operations. Local authorities have implemented rigorous tailings management, closed-loop water reuse targets, lithium slag storage standards and strict emissions limits. These measures have caused construction halts and extended permitting timelines for multiple projects in 2023-2024.

These 'soft' barriers-permits, local relationships and compliance history-are often more difficult to overcome than pure capital requirements. For new entrants, the combined risk of environmental litigation, permit denial or delayed compliance can render projects uneconomic or stranded.

Established supply chain relationships and long-term offtake agreements further lock in major customers. Yongxing maintains long-term partnerships with leading battery manufacturers, specialty chemical producers and industrial steel clients. These customers prioritize supply reliability, consistent quality (e.g., impurity specs, particle size) and timely logistics-areas where incumbents demonstrate proven capability.

• Customer stickiness: Multi-year qualification processes for battery-grade materials typically take 12-36 months of testing and validation before volume contracts are awarded.
• Sector certifications: In special steel, product certifications for aerospace, defense and other safety-sensitive sectors require years of testing-creating an additional entry lag.
• Offtake and price stability: Long-term contracts and strategic partnerships reduce spot exposure and protect margins in down cycles.