Market direction of four major materials for lithium ion batteries in China in 2022
The market demand and production capacity of the four major materials of lithium ion battery will rise rapidly, and the market demand will stride towards millions of tons/tens of billions of square meters. It is expected that the average growth rate of industry shipments will reach 60%-80% in 2022.
In 2021, the explosive growth of global new energy vehicles and energy storage market leads to a significant year-on-year increase in shipments of lithium-ion battery, which in turn leads to a significant year-on-year increase in shipments of the four major materials of lithium-ion batteries.
Affected by factors such as demand growth in the downstream market, rising prices of upstream raw materials and tight supply, China’s four major lithium-ion battery materials have experienced varying degrees of rising prices. At the same time, in order to meet the growth demand of the downstream market, the field of lithium ion battery materials has entered a new round of production expansion cycle, and the capacity scale has been greatly expanded. The overall market competition will enter a new stage of development.
On the whole, driven by the market growth of new energy vehicles, energy storage, power tools, electric two-wheelers and other fields, the shipments of main materials of lithium-ion battery such as cathode, anode, separator and electrolyte in China and key auxiliary materials such as copper foil and aluminum foil in 2021 all achieved a significant year-on-year growth, with an average growth rate of about 100% in the industry.
Facing the TWh era, the large-scale expansion of power battery enterprises requires their raw material suppliers to rapidly expand production and follow up, so as to ensure the stability of their raw material supply.
Under this situation, the market demand and production capacity of the four major materials of lithium ion battery will rise rapidly, and the market demand will stride towards millions of tons/tens of billions of square meters. It is expected that the average growth rate of industry shipment will reach 60%-80% in 2022.
The cathode material
In 2021, the significant year-on-year growth of China’s power battery shipments will directly lead to a significant increase in cathode material shipments. In 2021, China’s cathode material shipments are expected to reach 1.12 million tons, a year-on-year growth of more than 110%.
Among them, driven by the large increase in the shipment ratio of LFP power battery, the shipment volume of LFP material increased by about 250% year on year, far exceeding the ternary material, resulting in a significant increase in the overall market share of LFP material in cathode materials.
In 2022, it is expected that LFP power battery shipments will further increase, driving the further growth of LFP material market demand and maintaining the growth trend.
The main reason for the increase in the proportion of LFP material shipment is driven by the sales growth of model 3/Y, BYD Han, Hongguang Mini EV and other star models. LFP battery has a prominent cost-performance advantage, and its market value has been recognized by many Oems and battery factories.
While the ternary material part of the market is indeed squeezed by LFP materials, but its competitive advantage in the high-end market is still obvious, its product development path is to high nickel cobalt free direction. Among them, 90% ultra-high nickel materials in the industry have been mass-produced, and non-cobalt materials have also been produced in small batches, showing an obvious trend of high nickel.
From the perspective of supply end, there is no shortage of capacity at both the cathode material end and smelting end, which leads to the bottleneck of tight supply of cathode material mainly lies in the upstream lithium resource end. In 2021, the shortage of upstream lithium salt will lead to a sharp rise in lithium salt price, driving the increase in the price of cathode materials.
It is expected that the lithium price will remain high in 2022, but with the release of new capacity and technological breakthrough of lithium extraction from salt lake, it is expected that the tight lithium supply will be alleviated in 2023.
In terms of capacity expansion, both LFP material enterprises and ternary material enterprises are expanding capacity on a large scale, among which the expansion scale of LFP material is relatively large. Phosphorus chemical, titanium dioxide and other enterprises cut into the layout of LFP materials, will have a significant impact on the LFP material market.
In the case of large expansion of LFP material capacity, once the downstream LFP battery market demand is lower than expected or the demand slows down, it may cause excess capacity, and the industry will once again fall into the low-quality price war competition, and the market competition environment may deteriorate again.
The anode material
In 2021, China’s shipment of anode materials is expected to be about 720,000 tons, up about 100% year-on-year, and it is expected to maintain a significant growth trend in 2022.
Driven by a significant increase in power battery shipments, the artificial graphite market share in 2021 rose further, exceeding 82%, but the growth rate slowed down, mainly due to insufficient production capacity.
From the supply side, the production capacity of finished anode materials is relatively abundant, and the bottleneck of production capacity release lies in the insufficient graphitization capacity.
As the graphite chemical industry is a high energy consumption project, the production capacity is mainly distributed in Inner Mongolia, which is easy to be affected by power restriction and production restriction policy, and the approval process of new projects is long, resulting in the slow release of graphitized new capacity.
In this case, the field of anode materials is also expanding production on a large scale, the head of the anode enterprises to become the main expansion, while there are new enterprises to join, the scale of new capacity and investment scale are relatively large.
It is worth noting that the new anode projects of the head enterprises are mainly integrated, extending to the upstream graphitization processing field, in order to improve the proportion of graphitization self-supply, reduce manufacturing cost and improve product gross margin.
The separator
The new energy vehicle market is hot, and the growth of power battery demand drives the separator demand. In 2021, the shipment of lithium ion battery separator in China is expected to reach 7.8 billion square meters, with a year-on-year growth of more than 100%.
From the perspective of product structure, wet separator will still dominate the shipment of Lithium ion battery separator market in China in 2021, accounting for 70% of the market. The reason is the growth of ternary battery shipments, head wet separator enterprises have global supply capacity and are deeply bound with the head battery manufacturers. Driven by the strong terminal demand aroud the world, head wet separator enterprises have high capacity utilization rate and significantly increased shipments. But in the future dry single-pull separator market is expected to rise.
In terms of supply, it is expected that the supply and demand of separator materials will remain tight in 2022, and the price will rise slightly.
In terms of capacity expansion, Yunnan Energy , Senior Material, Cangzhou MingZhu, Sinoma Technology and other enterprises have started capacity expansion mode, and there are also new entrants layout. After the release of the new capacity of the above enterprises, the capacity scale of the China’s lithium ion battery separator will rise to a new stage, and the competition in the lithium ion battery cell separator market will be more intense.
The electrolyte
Driven by the growth of power battery shipments, electrolyte shipments in China in 2021 are expected to reach 500,000 tons, an increase of about 100% year-on-year.
In 2021, the release of electrolyte capacity in China is mainly limited by the insufficient supply of raw materials such as lithium hexafluorophosphate and additive VC. The supply of raw materials is in short supply and the price of electrolytes increases rapidly.
In order to meet the growth demand of the downstream market, lithium hexafluorophosphate, additives, solvents and other manufacturers are actively expanding production, accelerate the release of new capacity. Electrolyte prices are expected to start to decline in 2022H1, due to the easing of supply and demand of VC, lithium hexafluorophosphate and other key raw materials.
In the face of growing market demand and in order to further enhance competitiveness, electrolyte enterprises also open capacity expansion mode, and the capacity scale of new projects increases several times than in the past, market competition will enter a new stage.
The foil
Affected by the explosion of demand in the downstream market and insufficient supply in the upstream, China’s shipments of copper foil, aluminum foil and other materials for lithium ion battery in 2021 have increased significantly year-on-year, and the supply is in a tight state throughout the year. Head enterprise general order full, full production full sales.
Due to the rising price of raw materials, processing costs and insufficient production capacity, the market price of copper foil and aluminum foil for lithium ion battery will rise by different degrees in 2021.
In this situation, the lithium ion battery copper foil and aluminum foil industry are actively expanding production, but affected by factors such as insufficient capacity of imported production equipment and long project construction cycle, it is expected that the overall supply of China’s lithium ion battery copper foil and aluminum foil is still tight in 2022.
