Annual trend of Chinese separator industry
With the power battery market as the core growth engine, the demand for lithium battery separators has surged.
Data shows that China’s lithium battery products shipments in 2021 will be 327GWh, a year-on-year increase of 130%. Among them, the shipment of power batteries was 226GWh, a year-on-year increase of 183%, accounting for 69% of China’s lithium battery market.
Driven by strong market demand, China’s lithium battery separator shipments are 7.8 billion square meters in 2021, a year-on-year increase of over 100%.
The head separator enterprises are full of production and sales. Taking the 2021 annual reports of the three listed head separator enterprises in Top 5 battery separator companies in China as an observation, the shipment volume of SEMCORP exceeds 3 billion square meters, the shipment of SENIOR lithium battery separators is 1.22 billion square meters, and the shipment of Sinoma lithium battery separators is 680 million square meters.
The three companies accounted for nearly 63% of separator shipments. Driven by the market demand for separators, the revenue and net profit of the above three listed companies have also achieved varying degrees of growth.
Public company | SEMCORP | SENIOR | Sinoma |
Revenue in 2021 (100 million RMB) | 79.8 | 18.6 | 203.0 |
Y-o-Y increase or decrease | 86.40% | 92.50% | 7.58% |
Net profit in 2021 (100 million RMB) | 27.2 | 2.8 | 33.7 |
Y-o-Y increase or decrease | 143.60% | 133.49% | 65.40% |
Lithium battery separator business revenue (100 million RMB) | 64.4 | 18.4 | 11.7 |
Net profit of lithium battery separator (100 million RMB) | 24.52 | – | 0.88 |
Shipments（m2） | 30 | 12.2 | 6.8 |
Specifically, SENIOR’s performance has increased the most year-on-year. In 2021, its revenue will be 1.86 billion RMB, a year-on-year increase of 92.5%; its net profit will be 280 million RMB, a year-on-year increase of 133.49%.
Among them, lithium-ion battery separators were 1.84 billion RMB, a year-on-year increase of 109.7%. Sales of lithium battery separators reached 1.22 billion square meters, a year-on-year increase of 74.25%.
SEMCORP will achieve revenue of 7.98 billion RMB in 2021, a year-on-year increase of 86.4%; net profit of 2.72 billion RMB, a year-on-year increase of 143.6%. During the reporting period, the company’s lithium battery separator shipments exceeded 3 billion square meters.
In 2021, Sinoma’s lithium battery separator will achieve sales revenue of 1.17 billion RMB and net profit of 88 million RMB. During the reporting period, the sales of lithium battery separator A product was 680 million square meters, a year-on-year increase of 76%.
From the development layout of the three head separator enterprises, we can also glimpse the changes and development trends of the separator industry:
The investment amount has exceeded the level of 10 billion
The expansion of the head separator enterprises has entered the level of one billion square meters of expansion, and the investment amount has exceeded the level of 10 billion.
In 2021, SENIOR and SEMCORP’s cumulative amount of separator and coating capacity expansion will exceed 10 billion yuan.
Among them, SENIOR plans to build a “high-performance lithium-ion battery wet separator and coated separator project” in Nantong, Jiangsu, with a planned annual production capacity of 3 billion square meters, which will be constructed in three phases. The total investment amount is 10 billion yuan, which is also the largest investment project in a single separator project in 2021.
Sinoma, through its wholly-owned holding company Nanjing Lithium Film, plans to build an “annual output of 1.04 billion square meters of lithium-ion battery separator production line” in Nanjing, with an investment of 3.753 billion yuan. The production capacity of a single project has also exceeded one billion square meters.
With the widening of the gap in production capacity and the continuous decline in manufacturing costs, the market differentiation between leading separator companies and subsequent echelon companies will also further increase.
Mainly wet method and supplemented by dry method
The mainstream of separator production expansion is mainly wet method, supplemented by dry method.
In 2021, the production capacity expansion of SENIOR, SEMCORP, and Sinoma will mainly focus on the integration of base film and coating. The cost advantage of vertical integration projects has begun to become prominent, and the improvement in profit margin has been reflected in the performance of listed companies.
The gross profit margin of SENIOR lithium battery separator in 2021 will reach 37.75%, a year-on-year increase of 6.47%. The gross profit margin of SEMCORP membrane products reached 53.21%, a year-on-year increase of 7.82%.
It is worth mentioning that SEMCORP has also launched a dry-process separator production base project in Jiangxi to meet the future market demand in response to the mass demand in the energy storage market in the TWh era.
Accelerate the implementation of localized production capacity
Accelerate the implementation of localized production capacity with overseas orders as the market endorsement.
In 2021, SENIOR has successively signed supply contracts with Northvolt AB and LG, with an agreement value of RMB 3.34 billion and RMB 4.311 billion respectively.
At the same time, in order to support the production of Northvolt lithium-ion batteries, SENIOR has now established a wholly-owned Swedish company and invested in the construction of the first and second phases of the European factory. The annual production capacity of 100 million square meters will further accelerate the company’s development in the European market.
The SEMCORP Hungarian wet-process lithium battery separator project is also progressing in an orderly manner. After the project is put into operation, it will form a wet-process separator production capacity of 400 million square meters.
Battery separator prices may rise
The shortage of imported equipment has become a bottleneck for production expansion, and the price of separators may rise
The capacity expansion is “ambitious”, but it is difficult to quickly fill the gap in the supply of separators in the future.
The equipment of head separator enterprises is basically imported. At present, there are only 4 major separator equipment manufacturers in the world: Japan Steel Works, Japan Toshiba, Germany Bruckner, and France Isopp.
The expansion rate of the separator line depends largely on the availability of separator equipment:
On the one hand, the overall production capacity of global mainstream equipment suppliers is limited, and the pace of equipment expansion is relatively conservative;
On the other hand, it usually takes more than a year and a half from order placement to equipment delivery, and it usually takes several months for equipment debugging after the equipment enters the factory.
The strong downstream demand and the new production capacity will take time, and the industry supply and demand relationship will be further intensified, and the prices of dry process and wet process separators will rise.
