ASIACHEM believes that, as leading enterprise of China power LIB, CATL judgment and views on battery materials has great reference value. Base on content of CATL Growth Enterprise Board prospectus for IPO, ASIACHEM reviewed 2017 China LIB cathode material, anode material, separator and electrolyte industry situations for readers.
Nov 10, 2017, China Securities Regulatory Commission revealed Contemporary Amperex Technology Co. Ltd. (CATL) growth enterprise board prospectus for initial public offerings (IPO).
In terms of raw material purchase, CATL revealed the company purchase total amount and price changes rate in the report period as below:
Unit: CNY 10K
Raw Material Category | Jan-Jun 2017 | 2016 | 2015 | 2014 | |||
Purchase Total Amount | Price Changes Rate | Purchase Total Amount | Price Changes Rate | Purchase Total Amount | Price Changes Rate | Purchase Total Amount | |
LFP | 42,287 | -18.31% | 114,622 | 9.50% | 50,809 | -3.34% | 6,932 |
Ternary Material | 76,049 | 12.66% | 35,674 | 13.90% | 4,773 | 6.47% | 642 |
Graphite | 23,347 | -5.27% | 32,356 | -8.06% | 15,210 | -21.31% | 2,427 |
Separator | 38,354 | -22.04% | 60,122 | 0.04% | 30,079 | -3.74% | 2,832 |
Electrolyte | 32,684 | 0.41% | 52,831 | 51.37% | 15,038 | -21.11% | 1,957 |
Shell/ Top Cap | 37,545 | -6.97% | 57,537 | -35.42% | 28,154 | -36.31% | 4,582 |
Source: CATL Growth Enterprise Board Prospectus for IPO
Cathode Material
The company stated that: the company cathode materials are LFP and ternary materials. In the report period, LFP average purchase price showed fluctuation variation; average price of ternary material gradually increase. The main reason is price of Li2CO3 goes up, and price of cobalt metal goes up between 2016 and 2017.
China industry shows situation of ‘sitting on huge resources but severely relying on imported raw ore’. ASIACHEM <China Lithium and Cobalt Resources Annual Report 2017> shows that, China lithium ore raw ore dependency is as high as more than 70%. Main reason of price of Li2CO3 goes up is because rapid increase of NEV output brings Li2CO3 supply-demand relationship temporary imbalance. ASIACHEM believes that, in the future, price of Li2CO3 will tend to be reasonable.
ASIACHEM <China LIB Cathode Material Annual Report 2017> shows that, in 2016, LFP batteries and ternary material batteries occupy 95% China power LIB market.
In recent years, China comes up with many policies to guarantee development of batteries that have higher energy density, makes ternary material have become market mainstream, makes many cathode material enterprises and LIB enterprises great distribute capacities. Meanwhile, as supply and demand market imbalance and Congo (DRC) political instability, in recent years, price of cobalt metals and their products greatly increase. What is more, in ternary materials, the higher nickel content, the higher ternary material energy density. So, ASIACHEM believes that, high nickel ternary material will become market mainstream in the future.
Research indicates that, high nickel ternary materials must use LiOH to sinter. Ternary material towards high nickel direction’s development trend drives global lithium salts suppliers expanding LiOH capacity to respond to future needs.
Anode Material
The company stated that: the company anode material is graphite, average purchase price gradually goes down; in H1, 2017, due to environmental protection factor, the price rebounded slightly.
ASIACHEM research indicates that, currently, main LIB anode materials are natural graphite and artificial graphite. ASIACHEM <China LIB Anode Material Annual Report 2017> shows that, in 2016, China graphite anode material occupied about 95% market share. With increasing of China anode material manufacturing technology, meanwhile, China is main producing area of graphite, prices of China mid-end and low-end anode material gradually go down.
In Mar 2017, MIIT, NDRC and MEP (Ministry of Environmental Protection of the PRC) etc. 16 departments joint released ‘According to Law and Regulations, Guidance on Utilize Comprehensive Standards to Promote Outdated Production Capacity Withdrawal’, the ‘Guidance’ points out that, will wholly demolish production building used main frequency furnaces by law, and which makes each large steelmaking enterprise changes to arc furnaces one after another. As necessities of arc furnace steelmaking, demand of graphite electrodes greatly increase.
Graphite electrodes are one of downstream products of needle cokes. As needle cokes technology barrier is high, most needle cokes used to produce graphite electrode in China rely on import. Currently, China needle cokes demands exceed supply, and price goes up from CNY 4000/t at the beginning of 2017 to CNY 20k/t at present. LIB anode material is another downstream product of needle coke. Price of needle coke goes up also makes cost and price of anode materials go up.
In the future, with increase of energy density requirement, traditional graphite anode materials cannot meet the requirement and market share may slightly drops. Meanwhile, market shares of silicon based composite anode materials etc. will further increase. ASIACHEM <China LIB Anode Material Annual Report 2017> believes that, in 2019, China silicon based anode material capacity will reach around 4%.
Separator
The company stated that: the company separator average purchase price shows decreasing trend, mainly because China separator manufacturing enterprises increase in quantity and their capacities increase.
ASIACHEM <China LIB Separator Annual Report 2017> shows that, in 2016, China LIB separator capacity was 1.99bnm2/a, consumption was 1.372bnm2, among, the imported separator consumption was 288Mm2; China LIB separator capacity is 3.47bnm2/a in 2017.
ASIACHEM believes that, China LIB separator high-end separator is under-capacity but low-end separator is overcapacity. Leading enterprises in separator industry can realize stable supply of high performance separators and market share further increases. Though separator selling price decreases, these enterprises can still ensure higher than 60%’s gross profit rate.
Besides, it is worth noting that, many enterprises largely develop LIB separator industry because they think they have advantage of capital. In fact, ASIACHEM believes that, LIB separator industry is an industry that can succeed with technology, device, capital, talents and patience at the same time. Only having capital advantage or a certain of technology deposition precipitation, develop LIB separator project may be not smooth.
Ternary material battery becoming market mainstream comes up with higher requirement to LIB separators. Besides, using of coating technology can produce separators of higher strength base on thinner thickness. These all make wet process + coated separators have broad market spaces no matter in digital LIB or power LIB and are recently technique mainstream.
Electrolyte
The company stated that: the company electrolyte main raw material is LiPF6, recently, its price fluctuation is quite big led by industry capacity fluctuation.
ASIACHEM research indicates that, in early stage, China electrolyte totally relied on import, price was expensive and deliver time was long. Domestic made electrolyte entered market from 2011, which made China electrolyte selling price rapidly decrease and gradually replaced imported electrolyte. China price of electrolyte reached lowest point in history in Q2, 2015. After 2015, with booming increase of China NEV output, to electrolyte’s requirement largely increased. What is more, price of Li2CO3, needed of LiPF6 producing, greatly increased, and under-capacity of LiPF6 capacity, made prices of LiPF6, as well as electrolyte, went up. From 2016 to 2017, with gradually operation of new built capacities, prices of electrolyte and LiPF6 gradually decrease.
ASIACHEM <China LIB Electrolyte Annual Report 2017> believes that, developing new electrolyte lithium salts to partly replace mainstream LiPF6 products, increasing battery high temperature stability, reducing HF generation and increasing capacity retention rate after high temperature preservation is one of electrolyte performance optimization directions in recent years. Currently, in market, there are some new electrolyte lithium salts put into application, include LiBOB, LiODFB, LiFSI and LiTFSI etc.
In terms of main products’ selling prices change situation, CATL revealed the company main products’ price change situation in report period as below:
Project | Jan-Jun 2017 | 2016 | 2015 | 2014 | |||
Amount | Amount | Changes Rate | Amount | Changes Rate | Amount | ||
Power Battery Systems | Average Selling Price (CNY/Wh) | 1.52 | 2.06 | -9.74% | 2.28 | -21.30% | 2.89 |
Energy Storage Systems | Average Selling Price (CNY/Wh) | 2.94 | 2.69 | -27.99% | 3.74 | 43.15% | 2.61 |
LIB Materials | Average Selling Price (10k CNY/t) | 7.72 | 5.24 | -17.50% | 6.35 | ||
Source: CATL Growth Enterprise Board Prospectus for IPO
The company stated that: in the report period, the company power battery systems average selling prices were CNY 2.89/Wh, CNY 2.28/Wh, CNY 2.06/Wh and CNY 1.52/Wh, respectively, and shows decreasing trend. Currently, quite high cost of NEV is one of key factors that restrict industry development. Power battery systems as core parts of NEV, with progress of technologies and industrialization, its selling price going down is significant preconditions that NEV can compete with traditional vehicle, and to promote NEV industry high-speed development. In recent years, with power battery industry capacities gradually release, demand exceeds supply’s market structure changes, market competition strengthens, and influenced by NEV subsidies falling off, industry overall selling price decreases.
ASIACHEM research indicates that, in Dec 2016, MOF, MOST, MIIT and NDRC joint released ‘Inform on Adjusting New Energy Vehicle Popularization and Application Policies of Fiscal Subsides’. The ‘inform’ started implement on Jan 1, 2017. Inform points out that, except fuel cell vehicles, each kind of vehicle in 2019-2020 central and local subsidies standard and ceilings will fall 20% base on current standard.
In Apr 2017, MIIT, NDRC and MOST released ‘Inform on Printing and Publishing Vehicle Industry Mid and Long Term Development Plan’. The ‘Inform’ points out, to 2020, power battery cost will reduce to less than CNY 1/Wh.
ASIACHEM <China LIB Annual Report 2017> believes that, new energy vehicle subsidiary greatly falls, terminal cost reduction pressure will conduct to power battery enterprises. As LIB material cost occupies about 3/4 of LIB. In hence, except large-scale manufacturing, power battery enterprises can also reduce LIB cost by key material whole industry chain layout.
Currently, China power battery overcapacity is obvious. ASIACHEM data shows that, in 2016, China power battery consumption was 23.4GWh, capacity, however, was as high as 100.8GWh/a; in 2017, China power battery capacity is about 158GWh/a. In order to ensure long-term selling income, power battery enterprises can cooperate with vehicle enterprises. What is more, through cooperation with vehicle enterprises, power battery enterprises can deeper understand market requirement, improve their manufacturing processes, increase production efficiency, to ensure core competitiveness in fierce market competition of power battery industry.
Take CATL as an example, in May 2017, SAIC Motor and CATL JV and founded CATL SAIC Power Battery Co. Ltd. and SAIC CATL Power Battery System Co. Ltd. to engage in development, production and sales of LIB. In Jun 2017, SAIC Motor and CATL held two companies’ production projects’ foundation stone laying ceremony in Liyang, Jiangsu. The project plans to construct power battery total capacity 36GWh/a. Among, Phase-1 total investment is about CNY 10bn, plans to wholly operation by the end of 2018 and form 18GWh/a capacity.
