The negative electrode material industry is ushering in a new market change

Benefiting from the growth of demand in China's power battery market, China's anode material shipments and output value increased simultaneously in 2018, driving the growth of anode material enterprises. However, affected by the decline of subsidies, intensified market competition, rising raw material prices and declining product prices, the market concentration of negative electrode materials has further increased, and the polarization of the industry has entered a new stage.

At present, as the industry enters the stage of "cost reduction and quality increase", high-end natural graphite and artificial graphite products have accelerated the replacement of low-end anode materials, which has upgraded the market competition in the anode material industry.

From a horizontal point of view, the current anode material companies with high shipments may be acquired by listed companies or independently IPO, looking for backers to obtain capital support and help enterprises expand production capacity and develop new products. The development path of small and medium-sized anode enterprises that do not have competitive advantages in product quality and technology and customer groups will become more and more difficult.

From a vertical point of view, in order to improve quality and reduce costs, anode material companies have expanded production capacity and extended to the upstream graphitization processing industry, reducing costs through capacity expansion and manufacturing process improvement, and further enhancing the competitiveness of enterprises.

There is no doubt that mergers and acquisitions and resource integration between industries and the extension of the graphitization processing industry built by enterprises will undoubtedly reduce market participants, accelerate the elimination of weak players, and gradually disintegrate the "three small" competition pattern previously formed by negative electrode materials, thereby reshaping the competitive ranking of the negative electrode market.

Competing for graphitization processing

At present, the competition in the domestic anode material industry is still very fierce, and there are first-line echelon enterprises playing with each other to seize the leading position; There are also second-tier echelons actively expanding their strength, you catch up with me, narrow the gap with first-line enterprises; There are also potential pressures from new entrants.

Driven by the market demand of power batteries, the proportion of artificial graphite market continues to increase, providing demand guarantee for anode enterprises to expand production capacity.

Since 2018, large-scale domestic anode material expansion projects have been successively landed, with a single production capacity of 5,10 tons or even <>,<> tons per year, mainly artificial graphite projects.

Among them, the first-tier enterprises further consolidate their market position and reduce costs by expanding production capacity. Second-tier echelon enterprises are moving closer to the first-tier echelon through capacity expansion, but lack sufficient financial support and lack competitiveness in new products and technologies.

Including Betray, Shanshan Technology, Jiangxi Zichen, Kaijin Energy, Xiangfenghua, Shenzhen Snow, Jiangxi Zhengtuo and other first- and second-tier echelon enterprises and new entrants have taken the expansion of production capacity as the entry point to enhance the competitiveness of enterprises, and the production capacity construction base is mainly concentrated in Inner Mongolia or Northwest China.

Graphitization accounts for about 50% of the cost of anode materials, usually in the form of outsourced processing. In order to further reduce manufacturing costs and improve product profitability, anode material companies take self-built graphitization processing processes as a strategic layout to enhance their competitiveness.

With abundant resources and a low electricity price of 0.36 yuan/KWh (as low as 0.26 yuan/KWh), Inner Mongolia has become the site of graphitization factory construction of negative electrode enterprises. Including Shanshan, Jiangxi Zichen, Shenzhen Snow, Dongguan Kaijin, Xinxin New Materials, Guangrui New Energy, etc. have all laid out graphitization production capacity in Inner Mongolia.

The new production capacity will be released from 2018, and it is expected that the graphitization processing capacity in Inner Mongolia will be released in 2019, when the graphitization processing fee will fall.

On August 8, the world's largest lithium battery anode material base - Shanshan Technology with an annual output of 3,10 tons of anode material Baotou Integrated Base Phase I project was officially put into operation in Qingshan District, Baotou City.

It is understood that Shanshan Technology has an annual output of 10,38 tons of anode materials Baotou integrated base with a total investment of 6.4 billion yuan, after the project is completed and put into operation, it can produce 5,<> tons of graphite anode materials and <>,<> tons of carbon-coated graphite anode materials per year, with an annual output of <>,<> tons of graphitization processing capacity.

According to the survey data of the Lithium Battery Research Institute (GGII), the total shipment of lithium battery anode materials in China reached 2018,19 tons in 2, a year-on-year increase of 31.2%. Among them, Shanshan Technology ranked second in the industry in terms of anode material shipments and first in artificial graphite shipments.

"We put 10,<> tons into production this year, and by next year and the year after that, we will expand our production capacity more rapidly, and quickly grasp the pricing power of the industry with scale and cost performance." Zheng Yonggang, chairman of the board of Shanshan Holdings, said.

Obviously, Shanshan's strategy is to reduce manufacturing costs through capacity expansion, and then occupy a dominant advantage in product negotiation, forming a strong market impact on other anode material companies, thereby increasing and consolidating their market share. In order not to be at a complete passive disadvantage, other negative electrode companies naturally have to join the capacity expansion team, but the vast majority of them are low-end production capacity.

It is worth noting that although anode material companies are expanding production capacity, with the continuous improvement of power battery product performance requirements, higher requirements are also put forward for the product performance of anode materials. The accelerated replacement of low-end anode materials by high-end natural graphite and artificial graphite products means that a large number of small and medium-sized anode enterprises will be eliminated because their products cannot meet the needs of high-end batteries.

Market concentration has further increased

Like the power battery market, the concentration of the anode material market is also further increasing, and a few leading companies occupy the main market share.

GGII statistics show that in 2018, China's total shipments of lithium battery anode materials reached 19,2 tons, a year-on-year increase of 31.2%. Among them, Betray, Shanshan Technology, Jiangxi Zichen, Dongguan Kaijin, Xiangfenghua, Zhongke Xingcheng, Jiangxi Zhengtuo, Shenzhen Snow, Shenzhen Jinrun, Changsha Geling and other negative electrode material enterprises entered the top ten.

In 2018, the shipment volume of the anode material TOP4 exceeded 2,5 tons, and the total market share of TOP4 reached 71%, an increase of 2017 percentage points over 4, and the shipment gap between the fifth place and the head enterprise is widening. The main reason is that the competition pattern of the power battery market has changed greatly, resulting in changes in the competition pattern of anode materials.

GGII statistics show that in the first half of 2019, the total installed capacity of power batteries in China was about 30.01GWh, a year-on-year increase of 93%. Among them, the top ten power battery companies with total installed capacity totaled about 26.38GWh, accounting for about 88% of the whole.

Among the top ten power battery companies in terms of total installed capacity, only a few such as CATL, BYD, Guoxuan Hi-Tech, and Lishen Battery are in the top ten, and the ranking of the rest of the battery companies fluctuates every month.

Affected by the changes in the market pattern of power batteries, the market competition of anode materials has also undergone corresponding changes. Among them, Shanshan Technology, Jiangxi Zichen and Dongguan Kaijin are three enterprises based on artificial graphite products, because of the supporting CATL, BYD, EVE lithium energy, Lishen battery and a number of high-quality customers and outstanding product performance, driving the company's negative electrode shipments to increase significantly and market share.

Some anode material companies have experienced a sharp decline in the installed capacity of power batteries for supporting customers in 2018, resulting in a sharp decline in the company's anode product shipments.

From the current power battery market competition, the market of the top ten battery companies is as high as nearly 9%, which means that the market opportunities of other battery companies are becoming more and more remote, and then transmitted to the upstream anode material field, so that a number of small and medium-sized anode enterprises face great survival pressure.

GGII believes that in the next three years, the competition in the anode material market will be further intensified, low-end repetitive production capacity will be eliminated, and enterprises with core technologies and advantageous customer channels can achieve rapid development. Market concentration will be further improved, which will undoubtedly increase the operating pressure on second- and third-tier anode material companies, and they need to plan a way out in advance.

From December 12th to 16th, the 18 High-tech Lithium & Electric Vehicle Annual Meeting, named by Li Yuanheng, was held at the Hyatt Regency Shenzhen Airport, with the theme of "The Darkest Moment and Great Promise of Global Electrification". 2019+ upstream and downstream enterprises in the lithium battery industry chain, 500+ enterprise executives will gather in Shenzhen.

At that time, in view of the development trend of the global anode material market, the leaders of the subdivision industry will also share their layout rhythm and market research and judgment of anode material companies.