Battery-Grade PVDF Prices Keep Surging on R142b Shortage

SHANGHAI, Apr 11 (SMM) - Since the beginning of the year, the market attention has been increasingly drawn to the niche market of lithium battery-grade PVDF, in addition to the star of lithium salt. Though accounting for only 1-2% of the cost of downstream lithium batteries, it has achieved multiple titles and accomplishment like "the only cathode binder", "one tonne is hard to find", "CATL booked in advance", and "annual increase of more than 300%". Along with the burst of lithium demand, especially the rise of LFP batteries (1 GWh requires about 50 mt, tow times that of ternary battery) and the recent emerging of 4680 battery (1 GWh requires about 80 mt), the supply of lithium battery-grade PVDF is always short of demand, and manufacturers’ quotation has surged, with imports and home products exceeding 700,000 yuan/mt and 500,000 yuan/mt respectively. In the short to medium term, the supply pressure mainly comes from the following three aspects.

1. High technical threshold for lithium battery-grade PVDF

Lithium battery-grade PVDF has higher technology barriers. The core process and mass production capacity is only mastered by Solvay, Arkema, KUREHA and a few other foreign manufacturers. The production technology of general grade PVDF for coating and injection molding is relatively mature, while lithium battery-grade PVDF is mainly used as cathode binder and separator coating. As battery-grade PVDF directly affects battery capacity, cycle life and safety, the downstream has higher requirements for its performance (like purity, bonding force/molecular weight, consistency), and it is relatively difficult to use general grade as an alternative.

At present, the market is still highly dependent on imports, especially ternary batteries that demand greater energy density of. Nonetheless, with the development of independent research and development and national technology support, a number of domestic brands are also gradually gaining market recognition, such as Zhejiang Fluorine, Sinochem Lantian, Juhua, Huayi 3F New Materials, and Huaxia Shenzhou (Dongyue).

2.  R142b, the key raw material, is in short supply

The supply capability of R142b, the key raw material for PVDF, has a direct impact on PVDF production capacity. As R142b is a hydrochlorofluorocarbon-containing substance, it will cause some damage to the ozone layer, and production quotas for refrigerant-oriented ones are strictly bound by the Montreal Protocol and are being reduced year by year with a view to zeroing out by 2030.

According to the Notice on Strengthening the Management of the Production, Sale and Use of Hydrochlorofluorocarbons Containing Hydrogen and the Notice on the Management of Construction Projects for the Production and Use of Ozone Depleting Substances issued by the Ministry of Ecology and Environment, the products used as feedstock is not subject to production quotas. However, new R142b production capacity must be built in conjunction with downstream facilities and must not be sold separately to the public, which also receives strict control. Hence, overseas manufacturers lacking the ability to supply themselves with raw materials face a greater bottleneck in effectively realising capacity in the future than domestic integrated expansion manufacturers who could benefit from the policy.

At present market circulation of R142b only stands at about 20,000 mt, and one tonne of PVDF needs at least 1.65 mt of R142b. In order to meet the foreign investment for 23,500 mt of new PVDF capacity, at least 38,000 mt of R142b is required. Hence there is a gap of 18,000 mt of R142b. If we do not consider other needs, about 50% of the foreign capital-sponsored production expansion will probably abort.

3. Slow progress of new PVDF capacity of integrated production
 

R142b-PVDF integrated production project is hard to gain approval, and the expansion cycle is usually 2-3 years. Therefore, the production capacity growth rate seriously lags behind the pace of downstream lithium battery expansion.

Although the PVDF production capacity under construction and planned new capacity for domestic integrated production far exceeds 180,000 mt, most of the projects are still in the approval stage and do not have the conditions for rapid launch in the short term because the production process involves more hazardous chemicals. It is expected that some of the capacity will be put into production at the end of 2022 at the earliest.

After taking into account another 1 year of production line commissioning and downstream recognition cycle, SMM believes that the actual supply of new PVDF production capacity will come later than expected. The supply will still be tight before 2023, and prices will also remain high.

As of April 10, 2022, the statistics of disclosed PVDF expansion plans are as follows.