Summary of Lithium Battery Anode Industry Chain Market Situation

Summary of Lithium Battery Anode Industry Chain Market Situation

In 2019, the domestic lithium battery anode material output was 357,500 tons, with year-on-year increase of 38.87%; the sales volume was 331,000 tons, continuing growth momentum of the previous year.

Beginning in 2020, with non-declining domestic subsidy policy, the overseas market is going to usher an inflection point, and the Tesla Shanghai factory has been completed and put into operation, and many other pushes have made the entire lithium battery market optimistic. However, after the epidemic spread in Wuhan, all industries and field were affected in different extent, lithium battery anode electrode industry can’t get out of it.

1.Start date generally delayed

Before the Spring Festival holiday, some enterprises were originally scheduled to start on 31^st Jan, but in fact, the shift basically starts on February 10th. Now the production is mainly reply on employees who were on duty during the Spring Festival holiday. Other employees shall stay at home to be isolated for 7 days, and they can’t go outside if they just came from other province until 14day later. It means that manufacturers of anode materials can basically resume normal production in March.

Table 1: Production statistics of some anode material manufacturers

Company name	Production status	Notice
BTR	Normal production	Reduced operating rate
Shanghai Shanshan	Production stops in some factories	The Shanghai factory started on the 10th, and Ningbo, Huzhou, Ningde, Inner Mongolia, and Luzhou all started during the holidays.
Putailai	Production in some factories	Keep normal production in Liangyang plant
Kaijin	Production in some factories	Keep normal production in Inner Mongolia and Qinghai factories
Fujian Xiangfenghua	Go to work on February 10	Normal production is expected to resume after 14 days
Shinzoom	Go to work on February 10	Main manufacturing department started
Suntech	Not working	Specific start date to be determined
Jiangxi Zhengtuo	Go to work on February 10	Partially started
Shenzhen Radford	Go to work on February 10	Partially started

2.Graphite production start

According to a survey by Xinyi Information, graphitization manufacturers in Inner Mongolia started to work on February 3rd, but since November 2019, the power battery market declined again, the inventory of graphitization manufacturers is basically clean before the Spring Festival. The unsmooth logistics caused by the epidemic situation makes all graphitization manufacturers fall into an awkward situation of insufficiency. Logistics is currently the biggest problem. Not only difficulty to find trucks, but the price has generally risen by 20-40%, which reduced the marginal profit again.

January Carbon market focus

Epidemics drags market demand, negative production and sales of anode materials

Electric furnace steel companies have insufficient stocks, price of domestic small-size graphite electrodes raised with tight supply

Enterprise inventory is low, and domestic needle coke market is generally bullish.

Comprehensive evaluation of the industrial chain

The overall carbon market was weak in January. During the Spring Festival holiday, a sudden outbreak occurred, with lower operation rate of domestic anode material companies, overall production and sales were at a low level. The domestic graphite electrode and downstream electric furnace steel operating rates are now declining, and the market is in a deadlock. The effective inventory is not high, but the market outlook of enterprises is generally bullish.

Market analysis and forecast of major products

Market review 2019

The shipment volume of the anode materials market maintained a steady growth in 2019, mainly due to:

1) Driven by the growth of the power battery terminal market, the shipment volume of the power battery market in 2019 is 71GWh, an increase of 9.4% year-on-year, which will further increase the shipment of the anode material market;

2) The market has further increased the application of high-rate and fast-charge products, which has led to the rapid growth of artificial graphite shipments;

3) The export volume of enterprises represented by BTR, Putailai, and Ningbo Shanshan continued to increase. Among them, driven by the increase in shipments of LG and Panasonic power batteries, the export volume of Shanshan and BTR increased significantly;

4) The domestic small power and telecommunications energy storage market exploded, driving lithium battery shipments to increase, which in turn boosted anode shipments.

The lithium battery anode material market will still maintain rapid growth in 2020. The main reasons are as follows:

1) Driven by new energy vehicle terminals, it is estimated that China's annual output of electric vehicles will exceed 1.8 million in 2020, which will drive the growth rate of demand for power batteries to exceed 40%, and then drive rapid growth of anode materials;

2) Overseas power battery companies such as LG, Panasonic, and SKI have accelerated their capacity releases, increasing demand for anodes, which is expected to further increase the scale of domestic export of anode materials;

3) Fast-charging and rate-type batteries will still be an important market development direction. The proportion of artificial graphite anode materials is expected to exceed 80%, driving the overall growth of the anode material market.

The anode material market as a whole will still maintain rapid growth, but the output value will increase slowly. Under pressure from industry capital chain, and the gross profit margin will remain low.

The negative electrode market in 2020 is expected to have the following characteristics:

1 ) The self-built graphitization plants of the leading companies and the release of graphitization capacity have further accelerated, and energy saving, and consumption reduction have become the first choice for graphitization bases;

2) Bind between major customers and leading enterprises has been further deepened, and the layout of second-line echelon anode material companies abroad has accelerated;

3) The needle coke market is affected by the release of production capacity, and the price is expected to be further reduced by more than 10%. With the release of graphitization capacity and the effect of scale, the price of graphitization processing is expected to fall to 1-11 thousand RMB / ton, and the price of artificial graphite materials It will still maintain a decline of 2% -5%.

In three years, competition in the anode materials market will further intensify, and low-end duplicated production capacity will be eliminated. Only companies with core technologies and advantageous customer channels can achieve significant development, and market concentration will further increase. In other words, operating pressure is increasing.