Finance Association, May 21 (Reporter Liu Yue) The local government provided partial tax relief for 10 years. Electrolyte leader Xinzhoubang (300037.SZ) plans to invest about 2.5 billion yuan to build a battery chemical project in Louisiana, USA.

Xinzhoubang announced this evening that the company plans to use the wholly-owned company Capchem Technology USA Inc. (“New Zubang”) or another newly established holding company as the implementing entity to build a battery chemical project in Louisiana, USA. The construction of the project involves an annual production of 200,000 tons of carbonate solvent and 100,000 tons of lithium-ion battery electrolyte, with a total investment of about 350 million US dollars (about RMB 2,532 billion).

According to the announcement, the project aims to meet the North American market's demand for battery chemicals such as lithium-ion battery electrolytes. The local government provided partial tax relief for up to 10 years for this project, with an estimated total value of US$71.3 million (approximately RMB 516 million).

Xinzhoubang stated in the announcement that the project needs to be reviewed and approved by the relevant departments of environmental protection, safety, construction and operation of the project implementation site, and there is some uncertainty about the project implementation progress.

In fact, Xinzhoubang's overseas production capacity layout accelerated last year. According to the annual report, the company's overseas sales revenue in 2023 was 1,887 billion yuan, an increase of 29.28% over the previous year. According to reports, in the first half of 2023, the Polish base will be put into operation with 40,000 tons/year lithium battery electrolyte production capacity; in November 23, Poland's Xinzhoubang signed a long order of about 1.1 billion euros with a German customer, agreeing to provide customers with lithium battery electrolytes from 2025 to 2034. The company also said on an interactive platform last year that the US project and the European Dutch project are in early preparation.

However, Xinzhoubang stated in the announcement that the company previously signed a “Memorandum of Cooperation” with Indorama Ventures Oxides LLC on the battery chemicals project in the Gulf Coast region of the United States, and the two sides have terminated cooperation negotiations. At the time, the “Memorandum of Cooperation” planned to invest in the construction of an annual production of 100,000 tons of carbonate solvent and 50,000 tons of electrolyte in the US, and a joint production of 50,000 tons of ethylene glycol.

According to the annual report, Xinzhoubang's main products are battery chemicals (mainly including lithium-ion battery electrolytes) and organic fluorine chemicals, which accounted for 67.52% and 19.05% of last year's revenue, respectively.

From an industry perspective, in terms of production capacity, a large amount of production capacity was released centrally in the electrolyte industry in 2023. It has already entered the stage of phased and structural overcapacity, and market competition has further intensified. In terms of price, electrolyte prices “continued to fall” last year due to falling lithium carbonate prices.

According to data from the Shanghai Steel Union today, the average price of domestic lithium iron phosphate electrolyte is 22,200 yuan/ton, and the average price of three-yuan conventional power electrolyte is 29,700 yuan/ton. The Zheshang Securities Research Report pointed out that the price of electrolytes has fallen to industry costs, and there is not much room for profit to continue to fall; Pacific Securities Research Report also believes that the price of the electrolyte industry is already in the bottom range.