CCM: Is lithium carbonate real benefited side in power Li-ion battery business

Keyword:
Publish time: 17th February, 2016      Source: CCM
Information collection and data processing:  CCM     For more information, please contact us

  In 2015, China's power Li-ion battery market was growing explosively. However, most producers who invested largely, rarely have made profits to date. As the production capacity is expanded crazily, the domestic power Li-ion battery market probably will face risk of overcapacity according to analysts CCM.  

  

  

  Source: Baidu

   

  

  "In 2015, power Li-ion battery or Li-ion battery producers seemed to make money. However, it is probably below expectation. In our view, before 2015, no large-scale power Li-ion battery producers who invested about USD153.77 million (RMB1 billion) into the business already, dare to announce that they make profits. It is very common for us to lose USD15.38-30.75 million (RMB100-200 million) annually. Still it is uncertain that whether we can make up the losses in 2015-2016', said Wu Kai, manager of the Marketing Department of Tianjin Lishen Battery Joint-Stock Co., Ltd. (Tianjin Lishen), when he was interviewed by Yicai.com on 21 Jan., 2016.

  
In 2016, the aim to produce and sell 700,000 alternative energy vehicles will further enlarge the demand for power Li-ion battery. However, faced with crazily increasing prices of upstream raw materials and strong price undercut by downstream vehicle manufacturers, "the power Li-ion battery business will not be particularly good', commented Wu Kai. 

   

  

  The power Li-ion battery industry is "seemingly' prosperous. However, the real benefited side is the upstream raw material supplier. "The price of lithium carbonate has grown by 300%, from USD6,150.82/t (RMB40,000/t) in Oct. 2015 to USD24,603.27/t (RMB160,000/t) in Jan. 2016', stated Deng Guanhao from Shenzhen Zhuoneng New energy Co., Ltd.: "The price of lithium hexafluorophosphate (LiPF6) was USD15,377.05/t (RMB100,000/t) at the lowest, however within a few months, up to USD39,980.32/t (RMB260,000/t). This will finally push up the costs for power Li-ion battery, by about 20%'.

  
It is a "pincer attack' to power Li-ion battery producers. Accordingly, raw material suppliers have largely cut down the account periods – some raw materials have already been supplied by COD (= cash on delivery). Meanwhile, vehicle manufacturers extend the account period for battery producers, from the original 3 months to 4-6 months, despite the tight supply of battery.

  

     

       

  
  

       

  
It is matter-of-course that power Li-ion battery is of great importance to the full alternative energy vehicle industry chain. Despite this, "most of the small- and medium-sized producers have no significant bargaining rights', continued Wu Kai. In addition, vehicle manufacturers, especially those passenger vehicle manufacturers are inclining to foreign battery suppliers first like Samsung SDI Co., Ltd. and LG Corporation, and then to large local producers such as Hefei Guoxuan High-Tech Power Energy Co., Ltd. The small- and medium-sized enterprises, hard to realise scaled production, are confronted with heavier cost pressure.

   

  

  In 2016, the domestic power Li-ion battery market will not only be pressured by cost. From 2016, each alternative energy vehicle manufacturer is required to offer a warranty period of 8 years and 120,000 km, covering key spare parts such as power Li-ion battery. This is an inhibition to the power Li-ion battery segment.

  
Until now, many battery producers including Tianjin Lishen and Boston-Power Inc., cannot 100% promise that they are able to meet the said requirement. As the ternary battery is put into mass application, "safety is the largest problem', the aforementioned producers said bluntly.

  
In the future, problems in power Li-ion battery, such as quality assurance, will boost "dispute over trifles'.

  
After a short-run explosive development, the power Li-ion battery industry, pushed by cost and technology, will enter a "shakeout' period. According to statistics, the demand for power Li-ion battery totals about 40 GWh in 2016. However this year, the capacity will be expanded to 40 GWh. Even only 80% of capacity is put into operation, the risk of overcapacity will appear.

     

       


  

     
         

           

  

 

  

  About CCM:

  CCM is the leading market intelligence provider for China's agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

   

  For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailingecontact@cnchemicals.com or calling +86-20-37616606.

  

   

Tag: Li-ion battery, lithium carbonate