【Graphitization】Prices Increase!

Is the Graphitization Outsourcing Market Recovering?

In recent years, as extreme cost reduction in the battery industry has extended to anode materials, many anode companies face the risk of prices falling below costs. The situation for the anode graphitization outsourcing industry has also become increasingly difficult, with many companies facing a "life or death" test. At the end of 2023, anode material companies cleared their inventories. Additionally, in the first half of 2024, a major battery manufacturer's anode material bidding resulted in generally low prices, causing graphitization outsourcing fees to drop. Box furnace costs fell to around 7500 RMB/ton, and Acheson furnace costs dropped to 8500 RMB/ton, significantly challenging the operational cost control of graphitization outsourcing companies. Graphitized carburant is an essential raw material for manufacturing high-performance lithium-ion battery anode materials.

Earlier, the shortage of graphitization capacity had pushed the per-ton outsourcing price close to 30,000 RMB, attracting significant expansion from both upstream, downstream, and crossover players. However, as the anode market cooled, graphitization outsourcing prices began to decline, approaching cost levels.

Currently, with major anode material companies launching integrated production lines, the share and price of orders received by outsourcing companies are being compressed. Many graphitization outsourcing companies have seen a substantial decline in revenue. Meanwhile, the combination of fixed asset depreciation, labor costs, amortization expenses, and rising electricity prices has caused unit costs to increase. Most independent graphitization companies are now operating at break-even or loss margins, and some are already unprofitable due to differences in electricity costs, production lines, and processes. Newly established independent graphitization lines face the embarrassment of being shut down soon after starting production. 

As the graphitization outsourcing market gradually returns to rationality, companies realize that continued price reductions are unsustainable. The production of high-quality graphitized products requires extensive experience, making reliable graphitization capacity scarce. Additionally, a recent price increase in anode material bidding by a major downstream battery company has led to a gradual return of graphitization outsourcing prices to normal market levels. 

For graphitization outsourcing companies, there is little room for cost reduction through process improvements. Pre-carbonization to increase loading capacity offers minimal savings. Thus, companies located in areas with low electricity costs, stable supply, and extensive experience hold a significant advantage. This has led to a polarization in graphitization outsourcing orders: long-term contract orders are stable or increasing, while newly emerged small and medium-sized outsourcing companies must accept low-priced orders to maintain operations, preventing a significant shift from the overall low-price trend in the outsourcing market.

Although a true recovery in the graphitization outsourcing market may not occur in the short term, the upward price trend provides some respite for many outsourcing companies.

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