Companies keen to secure raw materials to supply surging market demand

Driven by the surging demand for new energy vehicles and efficient power storage gear－generated by the fast development of 5G base stations and data centers－from both global and home markets, China's lithium battery manufacturers are rushing to expand their factory capacities and seeking ways to secure material supplies of lithium carbonate.

With a number of production equipment being tested in its new plant in Yichun, East China's Jiangxi province, Zhang Wei, general manager of Yichun Gotion Battery Co Ltd, a subsidiary of Hefei, Anhui-province based Gotion High-tech Co Ltd, said due to the strong demand of lithium batteries since January, all the company's factories have operated at full capacity. The new plant will add another 15 gigawatt-hours of battery production capacity to its total production.

"We will start to build the second phase of this plant with a designed production capacity of 30 GWh, after putting the first phase into operation in late May," he said, adding as China aims to peak its carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060, its domestic sales and exports of NEVs will grow steadily.

China is expected to see continued growth momentum in NEVs this year with sales likely to exceed 5 million units, as this sector has grown from being policy-driven to market-driven, the Beijing-based China Association of Automobile Manufacturers predicted in January of this year.

China has been the world's largest NEV market for seven years in a row, with production increasing from 507,000 units in 2016 to 3.52 million last year. The country, in the meantime, exported 310,000 units, a year-on-year surge of more than three times, according to the latest data released by the Ministry of Industry and Information Technology.

From the first quarter, the cumulative loading of power batteries has grown by more than 120 percent on a yearly basis, said the China Industry Technology Innovation Strategic Alliance For Electric Vehicles.

Not only in the area of NEV manufacturing, Yang Baofeng, executive president of Shuangdeng Group Co Ltd, a Taizhou, Jiangsu province-based storage battery producer, said China's accelerated development of new infrastructure-related projects, such as 5G communication base stations and data centers, has also boosted demand for lithium batteries in recent years.

The company added a new production line with an annual output of 2 GWh to make lithium iron phosphate batteries in February. They are mainly used in the energy storage sector.

"With the energy storage market booming, our orders have shown a trend where supply falls short of demand to date this year," he said, adding that the company's orders in this category spiked by 81 percent year-on-year in the first quarter.

Pushed by accelerated energy transformation and an upgrading pace in many parts of the world, the growing demand of overseas markets, in particular Europe, has become another driving force to expand the production of lithium batteries in China. The country's export volume of lithium batteries grew by 53.7 percent year-on-year between January and March of this year, data from the General Administration of Customs showed.

Qiao Hualin, deputy head of Taizhou Customs, a branch of Nanjing Customs, said Taizhou's exports of batteries increased by 291.1 percent on a yearly basis to 1.51 billion yuan ($225.6 million) in the first four months. Its export destinations have gradually expanded from traditional markets in Europe and North America to economies in Southeast Asia and Africa.

Under the circumstances of high overseas demand, the strength of ensuring timely delivery to their clients has become a pivotal competition focus among manufacturers throughout China.