Front-line manufacturers may "raise prices" lithium diaphragms and set off an "arms race" for production capacity.

The "arms race" for the expansion of lithium battery separator enterprises is accelerating and upgrading, and the combination of hundreds of billions of "diaphragms" and trillions of "battery grasses" has pushed the race to the best part. On November 10, Enjie shares and Ningde Times signed an agreement that the two sides will jointly invest in the establishment of a platform company, with an estimated total investment of 8 billion yuan. After the establishment of the platform company, it will invest in and set up a wet separation membrane project company with a planned production capacity of 1.6 billion square meters per year, and a joint venture with Enjie holding Sun Company of Jiangxi Enbo to set up a dry separation membrane project company with a planned production capacity of 2 billion square meters per year.

In fact, this is not the first time Enjie has jointly built capacity with battery companies. As early as August this year, Enjie announced that it planned to cooperate with Yiwei Lithium Energy to set up a joint venture in Jingmen to build a wet lithium-ion battery separation membrane and coated membrane project with an annual production capacity of 1.6 billion square meters, and give priority to supply to Yiwei Lithium Energy and its subsidiaries, with a total planned investment of 5.2 billion yuan.

Enjie shares said on the investor interactive platform on November 1 that the diaphragm production capacity is expected to reach 4.5 billion-5 billion square meters this year, and the production capacity is expected to reach 7 billion square meters by 2022, with a delivery capacity of 4.5 billion-5 billion square meters.

In addition to Enjie shares, Sinopec Technology announced on November 9 that Inner Mongolia Lithium, a subsidiary of Sinopec Lithium Film, plans to invest 895 million yuan in Hohhot to build a "special wet diaphragm production line with an annual output of 320 million square meters for lithium batteries." Prior to this, Sinopec disclosed in May this year that Nanjing Lithium membrane, a wholly owned subsidiary of Sinopec Lithium membrane, plans to invest in the construction of an "annual production line of 1.04 billion square meters of lithium ion battery diaphragm" in Nanjing, with a total investment of about 3.753 billion yuan.

Earlier, Cangzhou Mingzhu announced in October that the company, Wuhu Mingzhu, planned to build a "wet lithium-ion battery diaphragm project with an annual production capacity of 200 million square meters" in Wuhu, with a total investment of 700 million yuan. The announcement shows that Cangzhou Mingzhu currently has an annual production capacity of 390 million square meters of wet diaphragm, and after the above projects reach production, the company's annual production capacity of wet diaphragm is 590 million square meters. In addition, the company also has a dry diaphragm annual production capacity of 100 million square meters and coated lithium battery diaphragm products.

It is worth noting that according to a report by BusinessKorea in August this year, South Korean lithium giant SKI said it plans to increase the capacity of lithium battery diaphragm from 1.4 billion square meters to 2.1 billion square meters by 2023 and to 4 billion square meters by 2025.

In recent years, the shipments of diaphragms have increased rapidly with the continuous growth of the demand for lithium batteries. Industry data show that in 2020, China's diaphragm shipments reached about 3.7 billion square meters, an increase of 36 percent over the same period last year, of which wet diaphragm was about 2.6 billion square meters and dry diaphragm shipments were about 1.1 billion square meters. In terms of production capacity, the total production capacity of diaphragm in China in 2020 is about 10.1 billion square meters, of which the production capacity of wet diaphragm is about 7.2 billion square meters and that of dry diaphragm is about 2.9 billion square meters.

In 2021, the new energy vehicle power battery market accelerated, leading to a further substantial increase in diaphragm shipments. In September, sales of new energy vehicles were 357000, up 148.4% from a year earlier. From January to September, sales were 2.157 million, an increase of 185.3% over the same period last year. According to data from the Power Battery Application Branch, the installed capacity of power batteries in the Chinese market in September was about 15.86GWH, an increase of 141.2% over the same period last year; from January to September this year, the installed capacity was about 95.26GWH, an increase of 178.8% over the same period last year.

With the gradual shift of China's new energy vehicle industry from subsidy policy to market demand, the growth rate of investment and new production capacity in the power battery industry is obvious. At the same time, the provincial and municipal scenery supporting energy storage and power supply side energy storage policies continue, in addition, the number of backup batteries in 5G base stations, multiple factors superimposed led to a large number of expected demand for lithium battery diaphragm, traditional diaphragm enterprises to expand production in line with the development trend of the industry. " According to industry insiders, it is expected that the demand for domestic power lithium batteries corresponding to diaphragms will reach about 5.5 billion square meters this year.

Judging from the current market pattern, in the field of wet diaphragm, Enjie shares, Xingyuan Materials and Sinopec Technology mainly occupy the market, of which Enjie shares account for more than 45% of the market; dry diaphragm field, it is mainly occupied by Xingyuan Materials, China Science and Technology, Huiqiang Energy, Cangzhou Pearl and other enterprises, of which Xingyuan material market accounts for as high as 50%.

Due to the strong market demand, according to relevant reports, at present, first-line manufacturers, including Enjie shares, Xingyuan Materials, Sinopec Technology, etc., have made a round of market price adjustment for some specifications of some customers, with an overall adjustment of about 10%. The price for first-line power battery manufacturers is still being discussed, and the lithium battery diaphragm is expected to realize the overall price increase in 2022.

Everbright Securities analysis said that because the diaphragm industry has the characteristics of large investment, long construction period and low rate of quality products, so the diaphragm production cycle is long, and the increment of diaphragm production capacity is expected to be limited in the future. In the next 1-2 years, diaphragm expansion is mainly concentrated in leading enterprises, the increment of diaphragm supply is limited, and the mismatch pattern of supply and demand in the industry is expected to continue.

In the long run, according to W-Scope, the global lithium battery market will be close to 1400GWH by 2025, and the demand for diaphragm will reach 20 billion square meters. by 2030, the global lithium battery market may exceed 3000GWH, and the demand for diaphragm will be close to 32 billion square meters, which is 5.3 times that of 2020. In terms of amount, only 2025 global base membrane profit space is expected to reach 4.86 billion yuan, coating film profit space of about 6.3 billion yuan, so the overall profit space of the diaphragm industry is expected to reach about 11 billion yuan in 5 years.

Industry insiders said that high-end power lithium-ion batteries have extremely high requirements for the quality of diaphragm products, and the supply of high-end production capacity in the overall diaphragm market is insufficient. In May, SKIET, SKI's battery materials division, said in a statement that the global high-end wet diaphragm market would be in short supply in 2023 due to "explosive" growth in downstream demand.