Anode material industry meets structural overcapacity

Lithium ion battery anode is an important part of battery pack. According to statistics, the proposed investment amount of China’s anode material projects in 2020-2022 exceeded 220 billion RMB, including 55 billion RMB in 2021 and 160 billion RMB in 2022, with a year-on-year growth of more than 200%. This is mainly because the market demand soared in 2021, resulting in a shortage of graphitization capacity. As a result, companies will accelerate investment and expand production, and companies outside the industry will continue to pour in.

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The main body of anode material expansion includes new and old companies

From the perspective of the main body of production expansion of anode materials, new and old companies have been deployed. It includes both old companies of anode materials, battery companies and cross-border companies. Traditional anode material manufacturers mainly focus on customer capacity layout; In order to protect their supply chain and control costs, battery companies have also deployed the market for anode electrode materials. For example, in China, the top 10 energy storage battery manufacturer CATL invested 10 billion RMB in Jinzhou, Liaoning, to build an integrated anode material project, and Gotion High Tech invested 10 billion RMB in Inner Mongolia to build a lithium ion battery anode material project. Besides, the entry of cross-border companies is mainly to promote the transformation and upgrading of traditional businesses and products through the new energy track and create new growth points for business development.

Graphite materials dominate the anode materials

From the perspective of product types for expansion, graphite materials occupy a leading position and silicon based materials have great development potential. The planned new capacity of graphite materials and graphite integration project in 2020-2022 accounts for more than 90%, mainly because of its excellent comprehensive performance, mature process and high market acceptance. In 2022, the new capacity of graphite materials and its integration project is planned to exceed 4 million tons, with a year-on-year growth of more than 1.5 times. Silicon based materials and their integration projects are planned to build new capacity, which exceeded 50000 tons in 2021 and 200000 tons in 2022, an increase of nearly three times. Compared with graphite materials, silicon based materials have a smaller market volume, but the growth rate is fast. This is mainly because downstream battery companies have continuously improved their requirements for battery performance. Silicon based cathode materials are considered the first choice for the next generation of high-capacity lithium ion battery anode materials because of their high theoretical specific capacity. Silicon based anode products of the leading companies have passed customer verification and have begun to be supplied in batches step by step.

Concentrated capacity of anode materials in Southwest, North and East China

In terms of regional distribution, the production capacity in Southwest China, North China and East China is relatively concentrated, accounting for more than 70%. In the future, the southwest region will continue to be a hot area for the construction of cathode materials. Due to its low electricity price, the capacity distribution of anode materials in the northwest region will further increase in the future. In 2020-2022, Sichuan, Shandong, Yunnan, Hubei and Shanxi ranked the top five provinces in terms of the proposed capacity of new anode materials in China, totaling nearly 4 million tons, mainly due to two reasons. First, cheap electricity prices and stable power supply; Second, it is close to the upstream raw material producing area and graphitization production capacity concentration area. Close to the downstream battery factory, it can provide supporting facilities for battery company customers nearby.

Development trend of anode material industry

On the whole, the anode material industry will show the following development trends: 1) In 2023, the investment in the anode material market will become calm The whole industry is optimistic about the market prospect before 2022. In order to seize the market share, the company capacity planning is ahead of time. The proposed new capacity of anode materials has far exceeded the market demand. The total planned capacity has reached five times of the demand. The product price has declined, and there will be structural overcapacity in the future. It is estimated that the investment in new projects to be built in the industry will drop to less than 80 billion in 2023, and the construction progress of signed projects may be slower than expected. 2) The integrated layout will remain the mainstream of development in the future The head anode material company realizes the integrated layout of anode materials through Datong graphitization, carbonization and raw materials, which not only effectively controls costs, but also ensures the supply safety of upstream raw materials, further enhancing the bargaining power with top battery companies. The future integration layout is still the mainstream of future development. 3) Regional layout around key customers and low production factors In order to reduce costs and improve customer timeliness, in the future, anode material companies will further focus on the layout of battery companies and gradually form regional clusters, such as Sichuan Province, China. 4) The progress of cell technology has promoted the growth of silicon based anode materials Generally, the construction period of the silicon based anode electrode material project is about one year, and the new projects will be put into production in 2022 in succession in 2023. Considering that the 4680 cylindrical core will be put into the market in mass production in 2023, it will drive the penetration rate of the silicon based anode electrode material to increase. As the large-scale capacity construction in the past two years will be released in 2023-2024, the capacity of the anode material market will be structurally surplus (the capacity utilization rate of the leading companies will be high, and the capacity utilization rate of the companies below the third tier will be less than 30%), which will lead to the gradual reduction of new capacity and investment in the market. Considering the difficulty of project energy assessment and environmental review and approval, companies should be more cautious in entering the field of cathode materials at this stage, and local governments should also consider carefully before recruiting anode material companies.