Ternary cathode materials: a market full of promise in China

Cathode materials, a key component of the lithium-ion (Li-ion) batteries that power our digital devices and, increasingly, our hybrid and electric cars, are already produced in large quantities in China. Cathode materials made in China can be found in devices made by Samsung, LG, Sony, and many other brands. However, according to China market intelligence firm CCM, the market is about to undergo major changes in the coming years, as newly-developed ternary cathode materials increasingly replace their mainstream rivals.

Current state of the cathode materials market in China

In China, both mainstream cathode materials such as lithium cobaltate (LiCoO₂), lithium manganate (LiMn₂O₄) and lithium iron phosphate (LiFePO₄), and the newly-developing ternary cathode material, lithium nickel manganese cobaltate (Li(Ni,Co,Mn)O₂), have achieved marketization.

LiCoO₂: Currently, the market is dominated by LiCoO₂, which accounted for more than 50% of the 48,000 tonnes of Li-ion battery cathode materials produced in China in 2013. LiCoO₂ is the preferred cathode material for small-scale, high-energy-density Li-ion batteries used in high-end electronic products both in China and worldwide. In recent years, Chinese-manufactured LiCoO₂ has been largely exported to South Korea-based Samsung Group, South Korea-based LG Group (LG), Japan-based Sanyo Electric Co., Ltd. and Japan-based Sony Corporation, and a stable supply chain has taken shape.

However, LiCoO₂ has two big disadvantages – high production costs due to scarce Co resources, and a high level of toxicity, which can cause harmful environmental pollution. For these reasons, downstream enterprises are demanding suitable substitutes for LiCoO₂, and it appears that LiCoO₂ is already in decline.

LiMn₂O₄: LiMn₂O₄ is a more eco-friendly cathode material with key advantages, such as low price, high electric potential and high safety levels. At present, LiMn₂O₄ is mainly applied in medium- and low-end electronic products. Overseas, especially in Japan and South Korea, LiMn₂O₄ is mainly used in power Li-ion batteries. The first Li-ion battery based on LiMn₂O₄ was launched in the early 1990s by Sony Corporation.

Nevertheless, LiMn₂O₄-based batteries tend to have poor circulation performance and their electrochemical performance degrades quickly. Manganese dissolution is also a problem when batteries are operating at temperatures of 55℃ or above, making them unsuitable for many applications.

LiFePO₄: As China’s alternative energy vehicle industry has developed, the domestic power Li-ion battery industry has increasingly been focusing its R&D efforts on developing LiFePO₄ as a cathode material. In this, China is clearly following the US’ lead, where Valence Technology Inc. and A123 Systems, LLC have already adopted LiFePO₄ in power Li-ion batteries, but China is yet to produce LiMn₂O₄ with fine circulation and storage performance at high temperature suitable for application in a power Li-ion battery.

Moreover, although LiFePO₄ is outstanding in its thermal stability, circulation performance and security, it still has shortcomings of low specific volumetric capacity and weak electrical conductivity.

Where the market is heading: Li(Ni,Co,Mn)O₂ a promising solution

Clearly, each of the mainstream cathode materials has its strengths and weaknesses. In recent years, both domestic and overseas researchers for Li-ion battery cathode materials have been making efforts to improve the performances of these three materials by optimizing various technologies. Also, they are searching for new cathode materials combining high security and high energy density with low costs.

Ternary cathode materials, such as Li(Ni,Co,Mn)O₂, have been widely recognized as one of the most promising and potentially valuable cathode materials. According to CCM’s research, in order to conform to the general industrial trend of developing ternary cathode materials, China has done a great deal of research in synthetic technology, lattice doping, surface coating and electrolyte modification with the aim of steadily advancing towards the industrialization of ternary cathode materials.

Industry insiders have informed CCM that although the market shares of ternary cathode materials are currently limited, the low production cost and high energy density of these new materials are so outstanding compared to other commercial cathode materials that their market shares are certain to increase.

In particular, in the field of power Li-ion batteries, the cathode materials targeted at LiMn₂O₄ and LiFePO₄ will transit into hybrid materials of LiMn₂O₄/Li(Ni,Co,Mn)O₂ and LiFePO₄/Li(Ni,Co,Mn)O₂ in the coming years. Finally, when ternary cathode material preparation has matured and the relevant patent applications have been processed, ternary cathode materials are expected to become the mainstream cathode materials for power Li-ion batteries.

Meanwhile, China’s National Standardization Technical Committee of Nonferrous Metals has begun the process of producing a set of related industry standards for Li(Ni,Co,Mn)O₂. The Standards for Li(Ni,Co,Mn)O₂ and the Method for Chemical Analysis of Li(Ni,Co,Mn)O₂ are expected to be issued in the near future. This will also help to further the development of China’s Li(Ni,Co,Mn)O₂.

-          This article was provided by CCM, a leading provider of data and business intelligence on China’s chemicals market. CCM has launched China Li-ion Battery E-News, a new e-journal dedicated to analyzing all the latest news and trends in China’s Li-ion battery industry. For more information on CCM and China Li-ion Battery E-News, please visit www.cnchemicals.com or contact econtact@cnchemicals.com

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China Li-ion Battery Market: enthusiastic government support for alternative energy vehicles is promising, but domestic manufacturers need to close the R&D gap

enthusiastic government support for alternative energy vehicles is promising

Boosted by enthusiastic policy support from both national and local government, China’s alternative energy vehicle market is booming. Production and sales have almost tripled year on year in 2014, and big increases are also predicted for 2015. The market’s fast growth is good news for China’s lithium-ion (Li-ion) battery industry, which should see its fortunes revived in 2015. However, CCM has warned that the gulf in R&D capabilities between domestic Chinese manufacturers and their international competitors could still do great harm to domestic companies’ long-term competitiveness.

Over the last few months, the Chinese government has demonstrated its determination to accelerate the development of the alternative energy market with a series of supportive policy announcements. In mid-July, the General Office of the State Council of the People's Republic of China (GOSC) implemented the Proposal on Purchasing Alternative Energy Automobiles for Governments and Public Institution, and GOSC followed this up in late-July by publishing the Guidance Concerning Accelerating Expansion and Application of Alternative Energy Automobiles. Among the proposals contained in the latter, the decisions not to restrict the entry of foreign alternative energy automobiles entering into local markets and to include charging stations in plans for local infrastructure were particularly noteworthy.

Then, in early August, China’s Ministry of Finance (MOF), the State Administration of Taxation, and the Ministry of Industry and Information Technology (MIIT) jointly issued the Announcement on Tax Exemption for Purchasing Alternative Energy Automobiles, announcing that vehicle purchase tax exemptions would come into force from September 1^st 2014. At the end of August 2014, MIIT released the list of the first 113 vehicle models to be freed from vehicle purchase tax. This list comprised models from 25 enterprises, including Beijing Automobile Works Co., Ltd., Guangzhou Automobile Group Co., Ltd., Anhui Jianghuai Automobile Co., Ltd. and BYD Auto Co., Ltd.

Chinese consumers are already showing a strong interest in alternative energy automobiles. According to the China Association of Automobile Manufacturers, between January and September 2014 China produced 38,522 and sold 38,163 alternative energy automobiles, increases of 290% and 280% over the corresponding period in 2013 respectively. Moreover, in September 2014 domestic output of alternative energy automobiles reached 10,113, 11 times higher than the output in September 2013 and the first time monthly output had ever exceeded 10,000.

However, while the alternative energy vehicle market is sure to grow strongly in the years to come, the fate of China’s domestic alternative energy vehicle manufacturers and their upstream suppliers is far from certain. Both the government and the domestic companies themselves appear to be ignoring the basic reality that China’s R&D capabilities in this area lag far behind the industry leaders in the US, Japan, and Europe. This presents a huge long-term risk to China’s domestic alternative energy vehicle industry, and a corresponding opportunity to the international competition.

Indeed, it could be argued that current policy in China will directly benefit overseas manufacturers with superior technology. The recently-announced policies tend to favor market openness and subsidies for consumers, such as the subsidies from both national and local governments on purchasing alternative energy automobiles, the purchase tax exemption on alternative energy automobiles, and the growing list of cities expanding and applying alternative energy automobiles.

According to CCM’s research, the two most important factors that individual Chinese consumers (who make up the majority of the market) consider when purchasing an alternative energy automobile are cost-effectiveness and battery life, and currently Chinese companies lack the technological know-how to compete on these two aspects.

For instance, one of the core components in an alternative energy vehicle, the advanced brake system, must not only comprise an anti-skid brake system (ABS), electronic stability program (ESP) and other functions, but also achieve effective energy recovery. An efficient electric energy recovery system can effectively increase an automobile’s driving range by up to thirty per cent. Many Japanese, German and American enterprises have full-fledged technologies and products in this area and have achieved industrialization.

In China, on the other hand, industry experts have informed CCM that although some manufacturers have successfully coupled control between ABS and the motor brake, their system control technology and related industrialization are still at primary levels and the electric energy recovery of the on-sale alternative energy automobiles does not achieve satisfying results. Moreover, the coupled control between ESP and the motor system is still at the R&D and experiment stages.

Similarly, there are concerns over the development of power Li-ion battery technology in China. CCM has learned that although many alternative energy automobile companies have purchased Chinese-manufactured power Li-ion batteries, these deals tend mainly to be used merely as leverage to gain a better price when negotiating with foreign suppliers. Once this aim is achieved, these companies will not make any further purchases from the Chinese suppliers.

For this reason, few domestic power Li-ion battery manufacturers are developing their strengths, since they are failing to maintain long-term bulk orders. Besides, domestic manufacturers are not investing enough in R&D. More worringly, many strong overseas enterprises engaged in power Li-ion battery business have started to set up plants in China, as they are supported by preferential policies from some local governments. Thus, China’s power Li-ion battery industry will face increasingly intensified threats from overseas competitors.

It is predicted that during the Thirteenth Five-year Plan (2016-2020), China will continue issuing favorable policies promoting the alternative energy vehicle market. However, if the fact of domestic Chinese manufacturers’ technological inferiority is not addressed, the prospects for the long-term development of China’s alternative energy vehicle industry may not be so promising.

-          This article was provided by CCM, a leading provider of data and business intelligence on China’s chemicals market. CCM has launched China Li-ion Battery E-News, a new e-journal dedicated to analyzing all the latest news and trends in China’s Li-ion battery industry. For more information on CCM and China Li-ion Battery E-News, please visit www.cnchemicals.com or contact econtact@cnchemicals.com

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Alternative energy vehicle market set to propel growth of China’s Li-ion battery separator industry

The alternative energy vehicle market in China is accelerating rapidly, with production of alternative energy automobiles set to increase 55% in 2015, according to China market experts CCM. This boom is fuelling the growth of several upstream industries, and none more so than the power lithium-ion (Li-ion) battery industry, which is enjoying rapid growth in China. In particular, CCM believes that the PVDF-coated Li-ion battery separator is a very promising product.

The Twenty-First Century has been kind to the Li-ion battery industry. First, the increasing ubiquity of consumer electronic devices such as smartphones sent revenue soaring – between 2003 and 2013, global Li-ion battery industry revenues increased from $5.31 billion to $27.55 billion. Now, the industry is enjoying a second windfall. Increasing demand from the energy storage and, especially, the alternative energy vehicle industries is predicted to raise global market demand for Li-ion batteries from 67.07 million kWh in 2014 to 131.20 million kWh in 2016, a 39.85% compound annual growth rate.

Growth in China’s Li-ion battery market has been even more rapid – the average annual growth rate in China has been 10-13% higher than the global average – and strong government support for China’s emerging alternative energy vehicle industry should benefit domestic Li-ion battery manufacturers even further. This support was cemented in July 2014 with the publication of the Guidance to Accelerate the Promotion and Application of Alternative Energy Automobiles, which contains development projects for China’s battery electric vehicle (BEV), plug-in hybrid electrical vehicle (PHEV), extended range electric vehicle (EREV) and fuel cell vehicle (FCV) industries.

As the power Li-ion batteries used in alternative energy vehicles contain a large number of separators, the increasing demand for hybrid and electric cars is good news for Chinese Li-ion battery separator manufacturers. Production of separators in China did not begin until as late as 2008, as the advanced technology required was out of reach of Chinese companies until that point. Nevertheless, the industry has made great strides in recent years and Chinese manufacturers are beginning to become suppliers of international clients. Shenzhen Senior Technology Material Co., Ltd. (Senior), for example, has supplied the US-based A123 System LLC. and the South Korea-based LG Electronics Inc. with its products.

However, the high performance needed to power an alternative energy vehicle presents a challenge to China’s separator manufacturers. According to industry experts, a power Li-ion battery’s internal temperature can rise to a very high level when in use, and this can easily cause the cathode separator to melt, which may result in a short circuit.

For this reason, CCM believes that PVDF-coated separators may become increasingly popular in China. Although more expensive than conventional separators, PVDF-coated separators offer several key advantages, significantly improving the safety performance, reducing leaking and the expansion rate, and extending the life cycle of the battery, and improving the consistency of battery cells.

As the table below shows, a number of Chinese companies are already manufacturing PVDF-coated separators. It is very likely that we will also see more companies join this market in the near future.

Details of some of China’s PVDF-coated separator manufacturers, 2014

Enterprise	New product	Remark
FSPG Hi-Tech Co., Ltd.	PVDF separators applied in solar battery	A leader in new polymer materials such as Li-ion battery separators, polarizing film and capacitor film
Cangzhou Mingzhu Plastic Co., Ltd.	New Li-ion battery separators such as composite separators, ceramic coated separators and PVDF coated separators	It has three production lines for Li-ion battery separators with a total production capacity of 20 million m2/a. The output in 2013 was 13 million m2.
Foshan Yingbolai Technology Co., Ltd.	Composite separators, ceramic coated separators and PVDF coated separators	/

Note: PVDF stands for polyvinylidene fluoride

Source: CCM

-          This article was provided by CCM, a leading provider of data and business intelligence on China’s chemicals market. CCM has launched China Li-ion Battery E-News, a new e-journal dedicated to analyzing all the latest news and trends in China’s Li-ion battery industry. For more information on CCM and China Li-ion Battery E-News, please visit www.cnchemicals.com or contact econtact@cnchemicals.com

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Tinci makes decisive move to strengthen its Li-ion battery electrolyte business

Since late September, Chinese Guangzhou Tinci Materials Technology Co., Ltd. (Tinci) has taken several actions that indicate it is attempting to maneuver itself into the supply chain of Apple and BMW. According to independent China market research firm CCM, if Tinci is successful, it is possible it could establish itself as China’s leading supplier of Li-ion battery electrolyte.

The first signs that Tinci was making a move to strengthen its Li-ion battery electrolyte business came on September 23^rd, when the company announced that it had completed a capital increase for its wholly-owned subsidiary Jiujiang Tinci Materials Technology Co., Ltd. (Jiujiang Tinci).

Jiujiang Tinci is mainly engaged in the R&D, production and operation of Li-ion battery electrolyte (6,000 t/a) and crystal lithium hexafluorophosphate (crystal LiPF₆) (2,000 t/a). Through this capital increase, Jiujiang Tinci’s registered capital increased to USD32.52 million (RMB200 million) from USD16.26 million (RMB100 million).

A week later, on September 30^th, Tinci de-listed another of its wholly-owned subsidiaries, Suichang Tinci Materials Technology Co., Ltd. (Suichang Tinci). Officials at Tinci stated that the decision to de-list Suichang Tinci was made in accordance with the company's overall strategy focusing on the Li-ion battery electrolyte business, and will help Tinci integrate and optimize its resource allocation, reduce costs in production and management, and improve its operating benefits.

Meanwhile, also on September 30^th, it emerged that Tinci was planning to make a private offering to raise further funds.  According to the plan, Tinci will issue 8.18 million shares at most at approximately USD5.27 (RMB32.40) per share. In total, this offering should raise an extra USD43.09 million (RMB265 million).

CCM has learned that Tinci plans to use these funds to buy out Dongguan Kaixin Battery Material Co., Ltd. (Dongguan Kaixin) for no more than USD32.52 million (RMB200 million), and also USD7.97 million (RMB49 million) in the construction of a new 6,000 t/a liquid LiPF₆ project. This move suggests a decisive pivoting of Tinci’s business towards the Li-ion battery electrolyte industry.

Moreover, according to CCM’s sources, Tinci is not only, or even primarily interested in acquiring Dongguan Kaixin to expand its Li-ion battery electrolyte business. Rather, Tinci is very keen to gain access to Dongguan Kaixin’s client base.

Competition in China’s Li-ion battery electrolyte industry focuses on the quality, not necessarily the quantity, of clients. This is because, for these Li-ion battery electrolyte manufacturers, gaining a quality client not only generates revenue, but also allows the company to learn from its client’s superior technical and R&D capabilities.

At present, Tinci’s client base is still mainly made up of domestic Chinese enterprises. However, if it succeeds in acquiring Dongguan Kaixin, Tinci will enter the supply chain of Amperex Technology Limited (ATL).

Not only is ATL the major supplier of Li-ion batteries for Apple Inc.’s digital products, it is also currently co-operating with BMW in a project to develop a power Li-ion battery for automobiles. In the future, ATL is widely expected to become BMW’s supplier for its alternative energy automobile business.  Entering the supply chain of such prestigious clients will surely help propel Tinci up the technology ladder, expand its business in both domestic and overseas markets, and possibly even allow it to seize the title of China’s leading Li-ion battery electrolyte supplier.

Tinci also plans to increase its production capacity of LiPF₆ in the near future. According to a statement released by Tinci, the liquid LiPF₆ project is designed mainly to deal with the rapid development in the alternative energy automobile industry and meet fast-growing downstream demand. The construction period for this liquid LiPF₆ project is about 1.5 years and construction should be completed in 2016.

Once completed, the production capacity of this project will be 6,000t/a of liquid LiPF₆, which is the equivalent of 2,000t/a of crystal LiPF₆. This will double Tinci’s total capacity, which currently stands at 2,000 t/a of crystal LiPF₆.

China’s LiPF₆ market is currently suffering from overcapacity, but the rapid development of the alternative energy automobile industry is expected to drive up demand for Li-ion battery electrolyte. According to CCM, LiPF₆ supply and demand in the LiPF₆ market should balance out by 2015.

-          This article was provided by CCM, a leading provider of data and business intelligence on China’s chemicals market. CCM has launched China Li-ion Battery E-News, a new e-journal dedicated to analyzing all the latest news and trends in China’s Li-ion battery industry. For more information on CCM and China Li-ion Battery E-News, please visit www.cnchemicals.com or contact econtact@cnchemicals.com

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Plenty of juice left in the Chinese LiPF6 market

After three years of plummeting prices and chronic industry overcapacity, there appeared to be nothing but more bad news in store for Chinese manufacturers of LiPF₆, a key raw material in the production of lithium-ion (Li-ion) batteries. However, according to China market experts CCM, there are suddenly many reasons to be optimistic about China’s LiPF₆ market.

The Chinese LiPF₆ industry has had a short but turbulent history. Due to the high production costs and advanced technology needed to produce LiPF₆, Chinese firms only began to enter the market en masse as late as 2011. At that time, the market was effectively monopolized by a small group of Japanese companies, including Kanto Denka Kogyo Co., Ltd., Stella Chemifa Corporation and Morita Chemical Industries Co., Ltd., which were then enjoying profit margins of up to 70%.

Keen to grab their share of this lucrative market, Chinese enterprises such as Do-Fluoride Chemicals Co., Ltd., Jiangsu Jiujiujiu Technology Co., Ltd. and Guangzhou Tinci Materials Technology Co., Ltd. started to set up their own LiPF₆ projects, and through the introduction of external technologies and their own independent R&D, they succeeded in breaking up the Japanese monopoly.

However, spurred on by this initial success, these Chinese firms began aggressively to expand their production capacities – as of December 2013, Do-Fluoride’s production capacity of 2,200t/a is the largest of any LiPF₆ manufacturer worldwide.

Problems soon emerged, as growth in demand was far too slow to keep pace with the rocketing production capacity. LiPF₆ prices began to fall from their 2011 levels of USD48,786/t (RMB300,000/t), and they kept on falling. Currently, the average price of LiPF₆ is just USD14,636/t (RMB90,000/t), less than one third of the average price just three years ago. This has hurt the profit margins of LiPF₆ manufacturers badly, and several smaller factories in Japan have been forced to cease production.

On the surface, the situation still appears to be challenging for the LiPF₆ industry. According to Xu Jinfu, chairman of Tinci, the global production capacity of LiPF₆ totals around 12,000 t/a at present, which, if completely converted into output and used to produce Li-ion battery electrolyte, would produce 80,000 t/a of electrolyte. On the other hand, the overall market capacity for Li-ion battery electrolyte is just 70,000 t/a at present. Overcapacity is therefore still a major problem, and this is reflected in Tinci’s latest results, which reported profit falls for its Li-ion battery material business in H1 2014.

Nevertheless, CCM believes that there are several reasons why we should feel very optimistic about the short- and long-term future of the LiPF₆ market in China. Firstly, although Tinci’s Li-ion battery material business saw profits fall in H1 2014, its sales volume increased by an impressive 70% compared to the same period last year. This sudden surge in demand suggests that the industry’s fortunes are already beginning to change.

What is particularly promising about this upturn in demand is that it is primarily coming from two emerging industries that have huge potential long-term – the alternative energy automobile and energy storage industries. The alternative energy automobile market especially is already having a great effect on demand for LiPF₆. The industry is growing rapidly – China is predicted to manufacture 55,000 alternative energy automobiles in 2014, and this is expected to increase to 100,000 in 2015. If the industry develops as predicted, it will already account for 9% of global demand for Li-ion battery electrolyte in 2015.

The energy storage market has possibly even greater long-term potential, although this potential is hard to quantify. One promising possible application of Li-ion batteries in the energy storage industry is in mobile base stations, so we can take this as an example. If all mobile base stations in China were to use Li-ion batteries to store energy, demand for Li-ion battery electrolyte would increase by approximately 20,000-40,000 tons. Considering that global demand for Li-ion battery electrolyte is currently only around 60,000 tons, it is clear that the development of this industry could transform the market for LiPF₆.

Looking more short-term, there are also reasons to be optimistic that Chinese LiPF₆ manufacturers may start to see their profit margins stabilize, or even slightly increase next year. Given the recent overcapacity problems, no expansions of production capacity will be completed before the end of 2015. Any increase in demand for LiPF₆ in 2015 should therefore directly benefit the manufacturers.

Moreover, even if the supply/demand situation does not stabilize as expected, it is worth bearing in mind that production costs for Chinese manufacturers remain significantly lower than the costs of their overseas competitors. Although LiPF₆ prices have declined in recent years, the current prices are still acceptable to many Chinese enterprises. By contrast, as already noted, several small-scale Japanese manufacturers have already had to quit the market. Therefore, if prices do continue to drop slightly next year, most Chinese manufacturers should be able to deal with the pressure on profit margins better than the international competition.

It has been a tough few years for China’s LiPF₆ companies, but they have struggled on impressively and look like they have plenty of juice left in the tank. It is possible next year that the trend toward declining profit margins will continue temporarily, but CCM expects rapidly increasing demand from the energy storage and, especially, the alternative energy automobile industries to decisively shift the balance of supply and demand in favor of the manufacturers. When this happens, these companies will finally be rewarded for their persistence.

-          This article was provided by CCM, a leading provider of data and business intelligence on China’s chemicals market. CCM has launched China Li-ion Battery E-News, a new e-journal dedicated to analyzing all the latest news and trends in China’s Li-ion battery industry. For more information on CCM and China Li-ion Battery E-News, please visit www.cnchemicals.com or contact econtact@cnchemicals.com

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