Get ready for the Price increase

As you can imagine I get a tremendous amount of our battery stuff we use at work out of China. Mostly because of availability first and then prices second.

One of our lead buyers that lives in China is saying that shipping cost has increased by about 300% from last year - China to LAX and this has greatly affected the LPO companies that rely on shipping. Just finding shipping containers themselves is virtually impossible - with most of them fully booked now 6 months out. One of the LPO companies that we work with, is now saying booking entire containers (40'x11.5'x8) that what use to cost them $1500 from China to LAX is now running $6500-$10000 due to the higher demand and container shortages.

SO if the transportation has increased sooo much why has prices pretty much only crept up?? Well the honest answer is that most of these LPO companies are making some damn good profit selling the batteries to us at what we are willing to pay for them. LPO batteries in China are SIGNIFICANTLY cheaper as you can imagine - so them eating a little bit of the shipping price - more and more - on shipping was just the cost of doing business. (Also lets face it - if they raised their prices then we just look for a lower guy. (That use to work - now it bites us in our butts because all the GRADE B's being passed off as A's)

NOW they simply cannot keep eating the costs AND pay the MUCH higher shipping rates - so we are expecting a large increase in shipping costs for the batteries to hit soonest. Of course no one on the call today could tell us what exactly that meant -- was it going to be $100 or $500 or "one million dollars" (Austin Powers) more but the days of many of these companies eating the costs are going to come to an end.

I don't see this happening overnight - BUT I do see us all looking back on all of these current prices a year from now and saying - "man if I had only stocked up" ...

The other huge issue is Christmas is coming. Any day now Home Depot and Walmart will start playing their XMAS music and the terrible looking Christmas stuff will start coming out. THAT means that YOUR battery shipments will NOW be competing with Christmas stuff to be shipped -- and guess who will win ....

((Total sidenote but our import agent told us that if you know what you are going to get ppl for Christmas you might want to start stocking up now. Of course this is only for us girls that plan this stuff out for months - and not the guys that do all the shopping on Amazon 2 days before XMAS!!))((But even Amazon is saying that they expect a large Christmas shortage due to the China shipping))

SOOO Shipping (SEA) prices are going up - the time to even get the goods out of and into a port is 2X as long - and this is not going to end well I don't think for many....

I don't see LPO prices going up to much - probably 20% by January 2022 - but the shipping costs are going to be what hurts...

Between COVID-19, COVID-D, COVID-MU, COVID-EIEIO + the US Govt printing trillions and trillions of dolalrs that is becoming more worthless every day and fueling inflation heavily -- I'm personally about to get as many batteries I can NOW for MY PERSONAL use which I think I may need in 2022.

NOW - all of the above is my personal thoughts -- I am an engineer and not an economist. Heck I'm not even sure what economist do, but I know that I am not one of them. No one should be basing their purchases on what I say - but with that said - I personally don't see things getting better any time soon - if at all.

We've got 100 days before Christmas -- and THEN we go into the Chinese New Year shortly after that .... just saying .....

Perhaps we need some LiFePo4 powered shipping competition???

When shipping is more than the manufacturing makes sense to ship the manufacturing. They make car batteries here, why not Lifepo?

I think that the shipping difficulties will become more pronounced as the battery prices fall. If LFP cells get to $60/kwh, the economics just won't work to ship them halfway around the world.

It's a different dynamic than solar panels - the value per kilogram is already lower, and doesn't seem inclined to rise. The battery industry will be more like the car industry than the electronics industry, with manufacturing distributed worldwide. Of course, that'll take a few years to shake out.

Lucky me, I just ordered 24 more cells last week, 16 to bump up my cabins battery pack and 8 cells for my camper battery pack. that or they can be cycled in and out fo the cabin pack if I got any bad ones.

It feels like this topic is veering away from "DIY LiFePO4 battery banks". Please try to stay on topic so we don't have to annoy the mods...

Regardless of the price of batteries, shipping them half way around the the world could make economic sense.
If LFP cells could be purchased for $0.00/kWh in China, they would still be shipped to the U.S., more in fact than are today.
Only if U.S. manufacturing cost drops below shipping cost (plus China purchase price) would manufacturing rise over here.

PV, cells used to be 0.025" thick, now maybe 0.010" thick. Wafers can be fabbed over there, shipped to the U.S., and large heavy panels assembled here.

Cell manufacturing has to be highly automated. Labor isn't the cost. Is equipment that much cheaper in China? Or is it still lax environmental regulations?

esouthard said:

I think that the shipping difficulties will become more pronounced as the battery prices fall. If LFP cells get to $60/kwh, the economics just won't work to ship them halfway around the world.

It's a different dynamic than solar panels - the value per kilogram is already lower, and doesn't seem inclined to rise. The battery industry will be more like the car industry than the electronics industry, with manufacturing distributed worldwide. Of course, that'll take a few years to shake out.

Click to expand...

That is what Musk and Panasonic are betting on. A lot of people scratched their heads at building battery plants in the US, but with demand growing there's no real choice - the shipping lanes imply can't handle the traffic required to electrify our country.

I'm pretty sure an investment into any mainland battery manufacturing facility is going to pay off.

Hedges said:

Regardless of the price of batteries, shipping them half way around the the world could make economic sense.
If LFP cells could be purchased for $0.00/kWh in China, they would still be shipped to the U.S., more in fact than are today.
Only if U.S. manufacturing cost drops below shipping cost (plus China purchase price) would manufacturing rise over here.

PV, cells used to be 0.025" thick, now maybe 0.010" thick. Wafers can be fabbed over there, shipped to the U.S., and large heavy panels assembled here.

Cell manufacturing has to be highly automated. Labor isn't the cost. Is equipment that much cheaper in China? Or is it still lax environmental regulations?

Click to expand...

Sure, it could make economic sense, with extreme hypotheticals. I'm not sure how they would make them for $0, unless they have technology they're keeping to themselves.

We could see a dynamic like the wafer/panel assembly split in solar cells that you mention, but I don't know enough about the manufacturing process to know where a similar break-point would be for batteries.

I'd like to learn more about the geo-economics of this whole industry so could someone please ELI5 the topic of why LiFePo4 batteries are not mass-produced in North America? In 2019, the McDermitt mine in Oregon was discovered and just 5 months ago was determined to have 10.1 million tonnes of lithium. The next largest deposit is in Chile with 8 million tonnes and my understanding is that China only has 1 million tonnes to work with. Canada also used to be a major lithium player in the 1950's since there are absurd amounts of lithium locked in the pre-Cambrian Shield.

So why are we (USA & Canada) not producing affordable LiFePO4 batteries on this side of the pond?

GingerHuntsman said:

I'd like to learn more about the geo-economics of this whole industry so could someone please ELI5 the topic of why LiFePo4 batteries are not mass-produced in North America? In 2019, the McDermitt mine in Oregon was discovered and just 5 months ago was determined to have 10.1 million tonnes of lithium. The next largest deposit is in Chile with 8 million tonnes and my understanding is that China only has 1 million tonnes to work with. Canada also used to be a major lithium player in the 1950's since there are absurd amounts of lithium locked in the pre-Cambrian Shield.

So why are we (USA & Canada) not producing affordable LiFePO4 batteries on this side of the pond?

Click to expand...

Two reasons:
1) Environment issues. Mining minerals is bad for the environment.. we can do things to make it less bad, but its always bad.. its one of the nastiest things mankind does. People in the USA won't accept an environmental disaster so companies need to mitigate the problems, which raises the price.

2) Strategic planning. Let other countries supply minerals when they are in low demand and relatively cheap. When technology advances and requires a specific resource for a major societal shift and supply runs low, then we open up the mines..

ghostwriter66 said:

As you can imagine I get a tremendous amount of our battery stuff we use at work out of China. Mostly because of availability first and then prices second.

One of our lead buyers that lives in China is saying that shipping cost has increased by about 300% from last year - China to LAX and this has greatly affected the LPO companies that rely on shipping. Just finding shipping containers themselves is virtually impossible - with most of them fully booked now 6 months out. One of the LPO companies that we work with, is now saying booking entire containers (40'x11.5'x8) that what use to cost them $1500 from China to LAX is now running $6500-$10000 due to the higher demand and container shortages.

SO if the transportation has increased sooo much why has prices pretty much only crept up?? Well the honest answer is that most of these LPO companies are making some damn good profit selling the batteries to us at what we are willing to pay for them. LPO batteries in China are SIGNIFICANTLY cheaper as you can imagine - so them eating a little bit of the shipping price - more and more - on shipping was just the cost of doing business. (Also lets face it - if they raised their prices then we just look for a lower guy. (That use to work - now it bites us in our butts because all the GRADE B's being passed off as A's)

NOW they simply cannot keep eating the costs AND pay the MUCH higher shipping rates - so we are expecting a large increase in shipping costs for the batteries to hit soonest. Of course no one on the call today could tell us what exactly that meant -- was it going to be $100 or $500 or "one million dollars" (Austin Powers) more but the days of many of these companies eating the costs are going to come to an end.

I don't see this happening overnight - BUT I do see us all looking back on all of these current prices a year from now and saying - "man if I had only stocked up" ...

The other huge issue is Christmas is coming. Any day now Home Depot and Walmart will start playing their XMAS music and the terrible looking Christmas stuff will start coming out. THAT means that YOUR battery shipments will NOW be competing with Christmas stuff to be shipped -- and guess who will win ....

((Total sidenote but our import agent told us that if you know what you are going to get ppl for Christmas you might want to start stocking up now. Of course this is only for us girls that plan this stuff out for months - and not the guys that do all the shopping on Amazon 2 days before XMAS!!))((But even Amazon is saying that they expect a large Christmas shortage due to the China shipping))

SOOO Shipping (SEA) prices are going up - the time to even get the goods out of and into a port is 2X as long - and this is not going to end well I don't think for many....

I don't see LPO prices going up to much - probably 20% by January 2022 - but the shipping costs are going to be what hurts...

Between COVID-19, COVID-D, COVID-MU, COVID-EIEIO + the US Govt printing trillions and trillions of dolalrs that is becoming more worthless every day and fueling inflation heavily -- I'm personally about to get as many batteries I can NOW for MY PERSONAL use which I think I may need in 2022.

NOW - all of the above is my personal thoughts -- I am an engineer and not an economist. Heck I'm not even sure what economist do, but I know that I am not one of them. No one should be basing their purchases on what I say - but with that said - I personally don't see things getting better any time soon - if at all.

We've got 100 days before Christmas -- and THEN we go into the Chinese New Year shortly after that .... just saying .....

Click to expand...

Ghostwriter66, you are absolutely right! Shanghai to West coast were $1500 per 40' container early 2020, which worked out to a five year average of $2200. That same five year average in July was $9800 per 40', close to 500% increase. Now we're hearing reports of $15,000 from China to the West Coast and are aware that carriers are charging additional premiums on top to prioritize the loading of a late booking ahead of normal FAK [Freight All Kinds] rate cargoes. That would be 10x increase! Shipping capacity is increasing with more ships but they can't increase capacity of the ports. Fortunately, holiday shipping is almost over end Sept, first of Oct and there will be about a month to catch up before Spring/Summer shipping. Definitely should be seeing some price increases in there.

Hey let's do a Lifepo4 Ponzi Scheme..

NwCali said:

Heading to buy more ammo tomorrow, along with gardening supplies....

Click to expand...

If you see any .30-06 can you pick it up for me. Anything less than $55/box is good. I have some 7.62x54r to trade.

While I would not like to see cell prices go up a bunch, even if they increased $10/cell, it would still cost me less to DIY a battery than to get one off the shelf.

Smokin said:

Hey let's do a Lifepo4 Ponzi Scheme..

Click to expand...

There's already a supplier on here that's done a pump and dump with used cells, weather intentional or not.

With the MASSIVE shipping delay, it would be entirely possible to do a ponzi-like scheme. Take orders, blame the shipping company, refund some, rinse, dry, repeat. It would eventually catch up with you, but as long as you continue to sell batteries at a faster rate than when you started, you could theoretically keep the growth percentage as "profit" while still issuing refunds. Or you could just take the money and declare bankruptcy, a pretty common business practice believe it or not.

The long shipping times are really opening doors for unscrupulous actors. Most of the time the credit charge back window is closed before you even receive your item, if you receive it at all.

It would be nice if a Chinese supplier opened up a US warehouse.

ken morgan said:

Lucky me, I just ordered 24 more cells last week, 16 to bump up my cabins battery pack and 8 cells for my camper battery pack. that or they can be cycled in and out fo the cabin pack if I got any bad ones.

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Yup, I just received 20 more 280ah CATL cells, 16 of which just finished top balance and are ready to deploy, and 4 as spares. I have 8 more on the ship which were ordered in July, and 64 more 135ah cells coming as part of the Seplos Mason kits.

I had noted a while back that prices are rising, and things were to get worse. Well, that is now confirmed by the OP post.

I suggest that if you have any storage needs coming up in the near future, now is the time to act. My shipping costs have risen from $135 per 16 cells to over $1000 for my recent order. Sea based shipping used to be slow and cheap. Now its just slow, and getting slower.

GingerHuntsman said:

I'd like to learn more about the geo-economics of this whole industry so could someone please ELI5 the topic of why LiFePo4 batteries are not mass-produced in North America? In 2019, the McDermitt mine in Oregon was discovered and just 5 months ago was determined to have 10.1 million tonnes of lithium. The next largest deposit is in Chile with 8 million tonnes and my understanding is that China only has 1 million tonnes to work with. Canada also used to be a major lithium player in the 1950's since there are absurd amounts of lithium locked in the pre-Cambrian Shield.

So why are we (USA & Canada) not producing affordable LiFePO4 batteries on this side of the pond?

Click to expand...

One word. Environmentalists

Hedges said:

Cell manufacturing has to be highly automated. Labor isn't the cost. Is equipment that much cheaper in China? Or is it still lax environmental regulations?

Click to expand...

It's tax law. When products can built tax free in Free Trade Zones, then shipped here Duty Free, corporations can't be competitive with the 21% tax load in the US if they manufacture here. That and the overly complex and restrictive regulatory environment make off-shore manufacturing too attractive to the shareholders.

ghostwriter66 said:

Between COVID-19, COVID-D, COVID-MU, COVID-EIEIO + the US Govt printing trillions and trillions of dolalrs that is becoming more worthless every day and fueling inflation heavily -- I'm personally about to get as many batteries I can NOW for MY PERSONAL use which I think I may need in 2022.

NOW - all of the above is my personal thoughts -- I am an engineer and not an economist. Heck I'm not even sure what economist do, but I know that I am not one of them. No one should be basing their purchases on what I say - but with that said - I personally don't see things getting better any time soon - if at all.

Click to expand...

Lifepo4 batteries can store more heat energy than a wad of worthless USD bills can release when burned for heat in winter

Some more background on shipping cost increases:

https://www.reuters.com/business/ch...ping-rates-sail-past-20000-record-2021-08-05/