SMM analysis: lithium battery separator production surpassed 1.6 billion square meters in May, up 9% MoM

In May 2024, China's lithium battery separator production reached 1.65 billion square meters, up 9% MoM and 38% YoY. Among them, the production of wet-process separators reached 1.26 billion square meters, up 10% MoM and 46% YoY. Meanwhile, the production of dry-process separators reached 391 million square meters, up 6% MoM and 18% YoY.
During the month, the downstream NEV and energy storage markets rushed to achieve goals, and most battery separator makers' orders steadily increased with the downstream growth. Leading producers are still facing significant delivery pressure, with production continuously ramping up, and the overall market scheduled production is clearly on the rise. However, from the perspective of production classification, the current upward trend of wet-process separators is relatively strong, with a MoM increase of 10%, outperforming the 6% MoM increase of dry-process separators. The reasons for this situation are twofold: firstly, the compatibility issues of dry-process separators with the 314Ah battery cell system have led to a gradual loss of market share in the utility energy storage market, causing some battery cell manufacturers who have long used the dry-process route to switch to the wet-process route. Secondly, the overall prices of base film and coating have reached a relatively low historical range, and with the overall market price retreat, the cost-performance advantage of dry-process separators has been weakened, leading to a slowdown in demand growth. Additionally, by mid-May, some small power and digital companies, in order to clear their battery cell inventory, significantly reduced their purchases of dry-process separators, which also dragged down the production growth of dry-process base film, resulting in weak growth. SMM expects that in June, China's lithium battery separator production will reach 1.62 billion square meters, down 2% MoM and up 30% YoY.