[SMM Energy Storage Battery Cell Market Weekly Review 9.3] Energy storage battery cell prices pull back slightly, and production schedule growth will rebound significantly in Q4.

This week, ESS battery cell prices edged down slightly amid fluctuations in upstream raw material prices, but the overall decline was relatively limited. Although the pullback in raw material costs has exerted some downward pressure on battery cell prices, the current supply-demand relationship for ESS battery cells remains relatively tight. Orders and capacity utilization rates at top-tier players are staying high, providing strong support on the price side, and there is no basis for a significant decline in the short term.

Production side, China's ESS battery production rose 4.92% MoM in September, a slowdown from the 5.6% MoM growth in August, but actual production performance was still slightly better than earlier expectations, and the industry overall continued to maintain relatively high prosperity. With the current capacity base already high, production still managed to sustain MoM growth of nearly 5%, reflecting that downstream orders continue to provide strong support for enterprise production schedules. Meanwhile, after the battery consumption tax officially took effect in September, the industry did not see significant concentrated rush production or order front-loading. The tax change was reflected more in cost and price-side bargaining, with relatively limited disruption to actual production pace.

Production pace, the growth in September production schedules narrowed somewhat on a phased basis. On one hand, this was related to some large-capacity battery cell production lines still being in the production ramp-up stage, as new products still require time in yield improvement, line commissioning, and capacity release. On the other hand, recent supply disruptions for some upstream raw materials also imposed certain constraints on battery cell enterprises' short-term production schedules. However, the current raw material supply issues are mostly concentrated among certain suppliers, and there remains strong substitutability among different material makers, so no significant industry-wide shortage has formed yet, and the impact on overall production is relatively limited. As large-capacity battery cell production lines gradually ramp up and production efficiency continues to improve, production-side growth is expected to continue to be released. Current enterprise production schedule plans show that Q4 production growth is trending upward again, with China's ESS battery production expected to rise about 5.25% MoM in October, and the MoM growth rate further increasing to about 6.19% in November.

Overall, the current ESS battery cell market still shows the characteristics of "slightly lower costs, mildly softening prices, still-strong demand support, and continued production schedule growth." In the short term, the pullback in raw material prices may continue to exert some pressure on battery cell prices, but against the backdrop of a supply-demand relationship that has not yet clearly loosened, battery cell prices are expected to remain dominated by minor fluctuations, with relatively limited downside. On the production side, although affected by the ramp-up pace of large-capacity battery cells and some raw material supply disruptions, the overall growth trend has not yet changed significantly.

SMM New Energy Research Department

Wang Cong 021-51666838

Ma Rui 021-51595780

Feng Disheng 021-51666714

Lyu Yanlin 021-20707875

Zhang Haohan 021-51666752

Wang Zihan 021-51666914

Wang Jie 021-51595902

Xu Yang 021-51666760

Chen Bolin 021-51666836

Yang Le 021-51595898

Li Yisha 021-51666730

Huang Chencong 021-51595860