By Guo Lingyan and Hu Shiming, CNCIC

An important part of lithium ion batteries, anode materials – mainly divided into carbon materials (e.g. artificial graphite, natural graphite and mesocarbon microbeads) and non-carbon materials (e.g. lithium titanate and silica-based materials) – are closely related to battery properties like energy density, cycle life, security, fast charging performance, etc. and account for 5%-15% of lithium ion battery costs.

Growth in China’s anode material shipment and proportion of artificial graphite anode materials

Benefiting from burgeoning power, energy storage and digital industries, China’s anode material shipment boasted a compound annual growth rate (CAGR) of 43.6% from 2016 to 2021, and – spurred by fast-growing lithium battery market – skyrocketed 97% YoY to 720 000 tons in 2021.

At present, artificial graphite and natural graphite are mainstream anode materials, making up more than 90% of anode material shipment. Superior in cycle performance, security and technology, artificial graphite is currently the most widely used anode materials, with shipment growing from 79 000 tons to 605 000 tons and shipment proportion rising from 67% to 84%, both from 2016 to 2021. Curbed by properties like poor cycle performance, poor solution absorption performance, etc., natural graphite is mainly used in 3C (computer, communication and consumer electronics) batteries, and its shipment proportion fell from 27% in 2016 to 14% in 2021.

Power lithium battery industry is forecast to remain rapid growth, given the nation’s policies to propel new energy vehicles. Rising demand from power, energy storage and digital industries is likely to increase shipment of lithium battery anode materials to 2.72 million tons in 2026, and the CAGR during 2021-2026 will be around 30.5% (see Figure 1 for details), lower than 31.2% of artificial graphite and 38% of promising silica-based materials and other anode materials.

Figure 1  Shipment of China’s lithium battery anode materials (2016-2026)

High entry barriers and seven major producers

Global market shares owned by domestic lithium battery anode material producers are high, and are expected to grow continually as domestic firms expand production much faster than overseas companies. In 2021, China’s output of anode materials occupied 92% of the world’s total.
Domestic competition pattern is relatively stable, with top seven anode material producers holding 77.6% of market shares in 2021. More specifically, the top three firms are BTR New Material Group Co., Ltd. (BTR), Ningbo Shanshan Co., Ltd. (Shanshan) and Jiangxi Zichen Technology Co., Ltd. (Jiangxi Zichen) and other four main producers are Hunan Zhongke Electric Co., Ltd. (Zhongke Electric), Guangdong Kaijin New Energy Technology Co., Ltd. (Kaijin Energy), Shijiazhuang Shangtai Technology Co., Ltd. (Shangtai Technology) and Fujian Xiangfenghua New Energy Materials Co., Ltd. (Fujian Xiangfenghua).

As for the artificial graphite market, combined shipment of the top three firms accounted for more than 50% of the total in 2021 (see Figure 2 for more details), while the natural graphite market was dominated by BTR, boasting obvious scale advantages and 64% of market shipment in 2021 (see Figure 3 for more details).
 Anode material market concentration is high, mainly because of three factors: 1) technologies that are complex and have relatively long R&D cycle; 2) lithium ion battery manufacturers choosing anode material suppliers strictly and willing to cooperate with suppliers in a long term; 3) large investment in fixed assets.

Figure 2  Shipment proportions of domestic artificial graphite anode material producers in 2021

Figure 3  Shipment proportions of domestic natural graphite anode material producers in 2021

Overcapacity of anode materials likely to come true due to rapid capacity expansion

A core part of artificial graphite production, graphitization processing consumes high energy, and therefore graphitization capacity was restricted by the nation’s policies regarding total energy consumption and intensity in 2021. This resulted in anode material short supply, which together with optimistic prediction on the new energy market attracted many firms – not only anode material producers but also battery enterprises and companies from other fields. These firms actively made plans to construct anode material projects. If ongoing and proposed projects are put into production as scheduled, China’s capacity of anode materials will soar to around 4 million t/a in 2025, including: 1) 3.39 million t/a of artificial graphite far exceeding 627 000 t/a in 2021; 2) 434 000 t/a of natural graphite higher than 225 000 t/a in 2021; 3) 167 000 t/a of other anode materials far beyond 17 000 t/a in 2021 (see Figure 4 and Table 2 for more details). This will probably lead to structural overcapacity of anode materials.

Figure 4 China’s capacity of anode materials during 2021-2025

Increasing graphitization self-supply ratio to become a main trend

Many domestic anode material firms are actively increasing graphitization self-supply ratio to satisfy production of anode materials, reduce production costs and improve profitability. China’s lithium battery anode material industry is forecast to remain fast growth. Artificial and natural graphite will dominate the anode material market in a long term, and silicon-based anode materials have great application potential. Considering increasingly fierce competition, domestic anode material enterprises have to upgrade technologies, improve product quality, etc.