TrendForce reports that China’s demand for NEV power batteries slowed down during the first half of this year because of the COVID-19 lockdowns in the second quarter. However, NEV sales in China maintained high growth during the first half-year period. Therefore, shipments of Li-ion battery electrolytes continued to grow. TrendForce’s data reveal that for the first half of 2022, China’s electrolyte shipments increased by 60% year on year to around 320,000 tons. Furthermore, China’s electrolyte shipments for the whole 2022 is currently projected to exceed 800,000 tons.
Figure: China’s Li-Ion Battery Electrolyte Shipments, 2016-2022H1 (Unit: 10k Tons)
Note: Blue bar represents shipments, and red line represents year-on-year change (%).
Source: TrendForce, August 2022
Regarding NEV battery installations in China during the first half of 2022, the total amount came to around 110GWh and showed a year-on-year growth rate of more than 109%. According to the distribution of NEV battery installations in China during the first half-year period, LFP batteries accounted for nearly 60%. Since LFP batteries have a higher per-GWh electrolyte demand compared with ternary batteries, the high growth of NEV battery installations also led to the high growth of electrolyte demand during the first half-year period. Another demand driver was the growth of Li-ion battery exports. For the first half-year period, China’s Li-ion battery exports rose by around 75% year on year. This contributed significantly to the increase in domestic electrolyte sales.
Turning to Chinese electrolyte suppliers’ expansion activities, the amount of additional new production capacity that was being planned during the first half of 2022 totaled more than 2.33 million tons per year. This figure is based on the notices issued by the major domestic suppliers such as Tinci, Capchem, Shida Shenghua, Jiangsu Guotai, and Faenlaite. Moreover, electrolyte manufacturing projects that entered the construction phase in the first half of 2022 came to more than 1.08 million tons per year in production capacity. These projects belong to Tinci, Capchem, Smooth Way, Hanghsheng Lithium Energy Technology, etc. TrendForce estimates that China will add around 660,000 tons per year of electrolyte production capacity in 2022, thus reaching a total of more than 1.3 million tons per year. The new production capacity added this year will mostly be activated and fully ramped up next year.
Figure: China’s Nominal and Planned Production Capacity Figures, 2020-2025 (Unit: 10k Tons)
Source: TrendForce, August 2022
Prices of electrolyte products went through a rollercoaster ride during the first half of 2022 because expansion activities related to the core raw materials such as LiPF6 and VC picked up the pace. Prices of LiPF6 in China dropped from the peak of around RMB 570,000 per ton to RMB 240,000 per ton at the end of June, showing a decline of more than 50%. As for prices of solvent products, they also shifted down during the half-year period due to the rapid release of new production capacity. Hence, the average price of electrolyte products in the Chinese market fell to RMB 60,000-80,000 per ton.
Figure: Prices of LiPF6 and LFP Battery Electrolytes in China
Note: The top chart shows the average price of LiPF6 in the Chinese market (RMB/ton). The bottom chart shows the highest (blue) and lowest prices (green) of the electrolytes used in LFP batteries (RMB/ton).
Source: TrendForce, August 2022
Looking ahead to the second half of 2022, the leading Chinese battery electrolyte suppliers will continue to rapidly expand production capacity. The production capacity of the whole domestic Li-ion battery electrolyte industry could reach the million-ton scale. Furthermore, the downstream demand related to NEVs and energy storage systems will keep growing, thereby further driving up the annual total shipments of electrolyte products. The current projection indicates that shipments or sales of electrolyte products in the Chinese market could surpass 800,000 tons for the entire 2022, thus showing a year-on-year growth rate of more than 60%. At the same time, the market presence of new kinds of electrolyte salts such as LiFSI will grow. In sum, the industry for Li-ion battery electrolytes in China will likely reach the million-ton milestone by the end of this year.
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