Expansion to Support China’s NEV Market Growth
Sichuan Zichen Technology, a key player in China’s anode materials industry and a subsidiary of Shanghai Putailai, is ramping up production. They aim to capitalize on the growing demand for new energy vehicles (NEVs). The company is building a new facility in Sichuan province. Their goal is to significantly increase its annual output of anode materials to align with NEV market growth.
The Qionglai production complex, currently under expansion, will add 100,000 tons of anode material capacity annually when its second phase is completed by the end of this year. This follows the first phase, which began operations in July. It brings the total production to 200,000 tons. Zichen is also planning a third phase by 2025. It will contribute an additional 80,000 tons annually. Consequently, the total output will be 280,000 tons per year. This expansion is a strategic response to the booming demand for NEVs and the corresponding need for anode materials as part of an overall NEV market growth strategy.
Challenges in Sales Due to Falling Graphite Prices
However, the company’s parent, Putailai, is facing challenges despite the expansion. In the first half of the year, Putailai’s sales declined by 1.8%. They sold 66,992 tons compared to 68,197 tons in the same period last year. This drop is attributed to a steep decline in graphite flake prices, which have plummeted to their lowest level in nearly six years. The drop in graphite prices has had a direct impact on anode material pricing. Consequently, it caused a slowdown in the company’s sales, especially as growth in the NEV market has shown signs of decelerating, affecting overall NEV market growth.
Positive Outlook for NEV Industry Despite Market Hurdles
On a positive note, China’s NEV market continues to grow at an impressive pace. Between January and September, NEV production rose by 32%, reaching 8.316 million units. Similarly, sales increased by 33%, totaling 8.32 million units. According to the China Association of Automobile Manufacturers (CAAM), this robust performance offers hope for anode material suppliers like Zichen. While the drop in material prices poses challenges, the long-term outlook for NEV-related industries remains strong. This favorable forecast offers numerous opportunities for growth in the NEV market despite existing challenges.
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