Tuesday, January 1, 2019

Chemical and Metal Shortage Alert – December 2018


The purpose of this blog is to identify chemical and metal shortages reported on the Internet.  The sources of the information reported here are primarily news releases issued on the Internet.  The issue period of the news releases is December 2018.

Section I below lists those chemicals and metals that were on the previous month’s Chemical and Metal Shortage Alert list and continue to have news releases indicating they are in short supply. Click here to read the November 2018 Chemical and Metal Shortage Alert list.

Section II lists the new chemicals and metals (not on the November alert).  Also provided is some explanation for the shortage and geographical information.  This blog attempts to list only actual shortage situations – those shortages that are being experienced during the period covered by the news releases.  Chemicals and metals identified in news releases as only being in danger of being in short supply status are not listed.

Section I.  

None

Section II.   Shortages Reported in December not found on the Previous Month’s List

Road construction materials: India; supply not keeping up with demand
Palladium: Global; production not keeping up with demand
Propane: Colorado; supply not keeping up with demand

Reasons for Section II shortages can be broadly categorized as: 

1.  Mining not keeping up with demand: none
2.  Production not keeping up with demand: palladium
3.  Government regulations: none
4.  Sources no longer available: none
5.  Insufficient imports:  none
6.  Supply not keeping up with demand: road construction materials; propane


Saturday, December 29, 2018

China’s Lithium Battery Production Capacity versus Demand


The table below (table 1) shows the approximate 2018-2020 gigawatt per hour (GWh) production capacities for most, if not all, of the primary lithium battery factories (for electric vehicles) in China.  This data is based on an intensive Internet search for company news releases and other information with such data.  The table also shows the expected 2025 expected production capacities for the same factories, and, again, with data based on news releases and other sources.


table 1            city
province
company
2018 - 2020 capacity (GWh)
expected capacity by 2025 (GWh)
beijing (shunyi)
admistrative district
funeng technology (usa)
0
8
changshu
jiangsu
sk innovation (korea)
0
7.5
changshu
jiangsu
suzhou youlion
1.5
2.5
chongqing
admistrative district
byd
0
20
dalian
liaodong
panasonic (japan)
10
22
ganzhou
jiangxi
funeng technology (usa)
10
25
guangzhou
guangdong
guangzhou great energy & technology
0
15
hangzhou
zhejiang
wanxiang group
0
80
hefei
anhui
guoxuan high tech co
4
22
huizhou
guangdong
byd
2
4
huizhou
guangdong
eve energy
7.5
20
jiashan
zheijiang
lithium werks (dutch)
0
8
jingzhou
hubei
geely
0
6
liyang
jiangsu
boston power (usa)
8
8
liyang
jiangsu
contemporary amperex technology ltd (catl)
18
36
luoyang
hainan
china aviation lithium battery (calb)
3
10
nanjing
jiangsu
lg chem (korea)
8
32
nanjing
jiangsu
lg chem (korea)
20
60
ningde
fujian
contemporary amperex technology ltd (catl)
12
50
qingdao
shangdong
guoxuan high tech co.
1
2
shanghai
admistrative district
tesla (usa)
0
30
shenzhen
guangdong
bak power battery
10
25
shenzhen
guangdong
byd
14
15
shenzhen
guangdong
optimum nano
0
10
tianjin
admistrative district
tianjin lishen battery co.
10
20
wuxi
jiangsu
automotive energy supply corp. (aesc) (japanese - chinese)
0
20
xian
shaanxi
byd
0
30
xian
shaanxi
samsung sdi (korea)
2.5
30
xiangyang
hubei
dynavolt
6
12
xining
qinghai
byd
12
24
xining
qinghai
contemporary amperex technology ltd (catl)
2.3
2.3
zhangzhou (zhaoan)
fujian
dynavolt
6
12
zhejiang
anhui
tianneng group
2.5
5.5
zhenjiang
jiangsu
farasis energy (usa)
0
20


total 2018-2020 GWh production capacity for EV lithium batteries
170.3
693.8


The Chinese Government has indicated that a targeted production in China for 2020 is 2 million electric vehicles (EVs).  Based on affordability and sources, most EVs sold in China currently are what can be called “low-end” EVs, meaning smaller lithium batteries ((assume an average size of 25 kilowatt hours (kWh) for this size vehicle)).   A much smaller percentage (5%) is “mid-range” (average battery size – 60 kWh) and “high-end” (average battery - 100 kWh), also about 5% of the market.  Table 2 below shows the expected total GWhs needed to produce these batteries (2 million for the EVs produced; 90% of them low-end; 5% mid-range; and 5% high-end).


table 2
number of batteries needed (% times 2 million)
required kWh per battery (average)
total kWh for size of battery (column B X column C)
kWh converted to GWh (column D divided by 1,000,000)
low-end batteries needed in 2020 (90% of 2 million)
1800000
25
45000000
45
mid-range batteries needed in 2020 (5% of 2 million)
100000
60
6000000
6
high-end batteries needed in 2020 (5% of 2 million)
100000
100
10000000
10



total GWhs of batteries for 2 million EVs
61


So, the expected total 2018-2020 GWh capacity (170.3 GWh), shown in table 1 above, exceeds the expected GWh demand (table 2 – 61 GWh), by 2.8 times (170.6/61).   This is based on assumptions on vehicle battery sizes used and the total EV sales.  Even if the mid-range and high-end sized EVs are greater in demand then the low-end, e.g., 26% for mid and 26% for high, the 2020 GWh capacity exceeds the GWh needed by about 63 GWh (170.3 GWH – 107.2 GWh).

Internet sources suggest that the Chinse Government’s target for EV production in 2025 is 7 million.  As you can see in table 1 above, expected Chinese factory GWh production capacity in 2025 is about 694 GWh.  And table 3 below, using the same expected low-end, mid-range, and high-end vehicle production percentages as in table 2, shows the expected demand to be about 213 GWh.  Then Chinese factories’ 2025 expected EV lithium battery production capacity exceeds the EV demand (7 million batteries) by about 481 GWh (693.8 GWh – 213.5 GWh) and by an even greater amount than in 2020 (3.3 versus 2.8).


table 3
number of batteries needed (% times 7 million)
required kWh per battery
total kWh for size of battery (column B X Column C)
kWh converted to GWh (column D divided by 1,000,000)
low-end batteries needed in 2020 (90% of 7 million)
6300000
25
157500000
157.5
mid-range batteries needed in 2020 (5% of 7million)
350000
60
21000000
21
high-end batteries needed in 2020 (5% of 7 million)
350000
100
35000000
35



total GWhs of batteries for 7 million EVs
213.5


Even if you assume mid-range and high-end EVs have most of the market in 2025 (e.g., 26% for mid and 26% for high versus 48% for low-end), battery production capacity greatly exceeds demand (694 GWh versus 277 GWh).

Even if given the possibility that battery production capacity data, expected EV vehicle production numbers, the percentages of low-end, mid-range, and high-end vehicles purchased, and the average sizes of their batteries are assumptions somewhat off from what is assumed above, it seems likely that Chinese factories will greatly exceed in capacity the ability to meet the Chinese domestic demand of EV lithium batteries.

Some conclusions on what appears to be an excessive Chinese lithium battery production capacity (for EVs) versus a demand for those batteries are:

1.      Profit pressure will be placed on many of the battery-producing companies with some of the companies failing;
2.      More international automobile companies may set up EV production in China to take advantage of the excessive battery supply;
3.      A lot of value may go to waste (setting up lithium battery production lines require millions of dollars) as production capacity so greatly exceeds demand and goes unused; and
4.      Chinese government market intervention through subsidies and targeted production plans interferes with more sound supply-demand analysis (for capital expenditure decisions) that takes place in a market system like the one in the United States.