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Market for Lithium Batteries Used in IT Products Reached Equilibrium in Q2
August 10, 2016 | TrendForceEstimated reading time: 2 minutes
China’s new energy policies are driving the country’s domestic market for lithium batteries used in plug-in vehicles (xEVs). The strong demand from the xEV application has put pressure on the supply lithium batteries used in IT products. For a while, there was a shortage of cylindrical lithium cells for IT applications. However, the current supply of IT batteries is not as tight as before because of adjustments made on both the supply and demand sides. The latest lithium cell price report from EnergyTrend, a division of TrendForce, finds prices of cylindrical cells in the second quarter rose by 1~4% compared with the first quarter. During the same period, the overall production capacity of polymer cells also expanded, causing a 1~2% quarterly decline in polymer cell prices. In sum, the worldwide lithium battery market reached a healthy supply-demand balance in the second quarter.
A large portion of the cylindrical cell supply has shifted from the IT market to the xEV battery market, where demand has been rising rapidly. Consequently, many IT product brands in the second quarter continue to adjust their product mixes to lower their consumption of cylindrical cells and increase the use of polymer and prismatic cells. Therefore, the supply shortage for cylindrical cells was much milder during the period. For the third quarter, EnergyTrend expects supply to keep pace with demand.
Polymer cell suppliers such as Amperex Technology (ATL) have kept expanding their production capacities. On the other hand, the polymer cell market also have seen sharp demand growth from IT applications. Hence, polymer cell prices were on a downtrend in the second quarter but the overall decline was marginal. “Supply of polymer cells will increase in response to strong demand from notebook and mobile phone applications,” said Duff Lu, research manager of EnergyTrend. “Notebook brands are now undertaking their own standardization processes for lithium polymer batteries. Polymer battery products for mobile phones, however, are still highly customized and their supply quantities are small."
Additionally, demand for xEV batteries continues to grow. At the end of the second quarter, the Chinese government released the fourth version of the list of battery makers whose xEV products were eligible for subsidies. In terms of policy direction, the subsidy targets are now wholly domestic battery makers. Foreign manufacturers for now are excluded even if they have already invested in building local production facilities. “Nonetheless, international suppliers of lithium batteries will continue to focus on China due to the expansion of the local xEV market and the introductions of new policy incentives,” said Lu. “Samsung for instance, has announced that it is going to acquire a 4% stake in major Chinese automaker BYD for KRW 500 billion (or around US$450 million). This investment indicates that Samsung is bullish on the Chinese lithium battery market and will strengthen ties with Chinese companies to get Samsung SDI batteries approved for xEV subsidies.”
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