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.

Chemical and Metal Shortage Alert – November 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 November 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 October 2018 Chemical and Metal Shortage Alert list.

Section II lists the new chemicals and metals (not on the October 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 November not found on the Previous Month’s List

o-chloronitrobenzene: United States; sources no longer available

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: none

3.  Government regulations: none

4.  Sources no longer available: o-chloronitrobenzene

5.  Insufficient imports:  none

6.  Supply not keeping up with demand: none

Some Data on Synthetic and Natural Rubber Production and Revenues

Based on Internet research, global data on recent synthetic and natural rubber production and revenues are presented in tables 1, 2, and 3.  The data comes from a variety of sources, for example, various market studies.  Amounts provided at these studies can very, for example, 2017 synthetic rubber production might be given as 14.8 or 15.3 million metric tons (mt).  So, a “best guess” average or median is used in the tables.  The tables’ data are met only to be approximate; best used in comparing difference magnitudes in production and revenues from year to year and between rubber types.

table 1    year	synthetic rubber production (millions of mt)	price per mt (synthetic rubber)	synthetic rubber revenues (millions usd)
2014	14.2	$                2,600	$            36,920
2015	14.5	$                2,100	$            30,450
2016	14.8	$                2,024	$            29,955
2017	15.1	$                2,022	$            30,532

table 2     year	natural rubber production (millions of mt)	price per mt (natural rubber)	natural rubber revenues (millions usd)
2014	12.1	$                1,950	$            23,595
2015	12.3	$                1,560	$            19,188
2016	12.7	$                1,378	$            17,501
2017	13.2	$                1,651	$            21,793

table 3 synthetic rubber name	2017 production (millions of mt)	2017 average price per mt	2017 revenues (millions usd)
styrene butadiene (sbr)	5.1	$                2,000	$            10,268
polybutadiene (br)	3.6	$                1,900	$              6,886
polyisoprene rubber (ir)	0.8	$                2,800	$              2,114
butyl rubber (iir)	1.2	$                2,400	$              2,899
nitrile rubber (nbr)	0.6	$                2,800	$              1,691
ethylene propylene diene monomer (epdm)	1.4	$                2,700	$              3,669
totals	12.7		$            27,527

Comparisons between table 1 and table 2 are interesting in that synthetic and natural rubber compete with one another, based on various factors.  From the tables, we see that synthetic rubber is used from 1.4 to 1.7 times more than natural rubber (on a global basis).  These differences should represent the various factors that go into decisions on replacing synthetic with natural rubber or vice versa in products.   Also, the tables show (assuming the price per mt data, which are approximate annual averages, are correct) that natural rubber tends to be from 70 to 80% cheaper per metric ton than synthetic rubber.

Table 3 shows six frequently-used polymers identified as rubbers.  The table shows the total 2017 production for these six as 12.7 million metric tons.   This amount differs from the table 1 2017 synthetic rubber production (15.1 million mt) because other rubber-like polymers are also manufactured (other than the six in table 3).   And tables 1 and 3 suggest that about 2.4 million metric tons (15.1 - 12.7) of these other polymers were produced in 2017.

Financial Benchmarking Data for Small Chemical Companies

A Canadian Government’s website provides financial data for small Canadian chemical companies.  Click here to go to this website.  The data is based on reporting to the Canadian Government by approximately 2,000 chemical companies ranging in size form $30,000 (Canadian dollars) to $5 million in revenues.   Income statement data are provided, but not balance sheet data.   The average revenue for all companies is $816,900 and 72.4% of the companies are profitable.  The average gross profit margin percentage is 48.1 percent.

The Canadian site provides data for companies offering the following products: basic chemicals; resins, synthetic rubber, and artificial and synthetic fibers and filaments; pesticide, fertilizer, and other agriculture chemicals; pharmaceuticals and medicines; paints, coatings, and adhesives; and soap, cleaning, and toilet preparations.

The United States Census Bureau has income and balance sheet data for chemical companies with total assets less than $25 million.  Click here to go this data (pdf file).  Assets of less than $25 million suggest companies similar in size to the companies represented at the Canadian government site.  The US Census Bureau data includes balance sheet data, while the Canadian data does not.   However, the US income data does not include cost of sales, so that gross profit margin percentages cannot be computed.  The US data also report on chemical companies by product offerings.

Such financial data for smaller companies, as given by the Canadian and US governments, can be difficult to find.  This data can be valuable to smaller chemical companies interested in benchmarking their financial data to other similar-sized companies offering similar products.

Chemical and Metal Shortage Alert – October 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 October 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 September 2018 Chemical and Metal Shortage Alert list.

Section II lists the new chemicals and metals (not on the September 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 October not found on the Previous Month’s List

Adiponitrile – nylon 6,6:  global; production not keeping up with demand

Coal:  India; 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: adiponitrile

3.  Government regulations: none

4.  Sources no longer available: none

5.  Insufficient imports:  none

6.  Supply not keeping up with demand: coal