In the earnings conference of Shanghai Putailai (603659.SH) held today, the company's core business of anode materials and solid-state battery materials became the most concerning issue for investors. According to statistics from Caixin, out of the 50 questions submitted by investors, about 50% were related to the above aspects.

Regarding the price of anode materials, Chairman Liang Feng of the company stated at the earnings conference that due to reduced profits and tighter financing, the speed of investment in new production capacity in the industry has significantly slowed down, and it is expected that there will be limited space for further price reduction in the future.

There is limited room for price reduction in the future for anode materials.

Anode materials are the core business of Shanghai Putailai. The financial report shows that in the first half of 2024, the company's shipment volume of anode materials was 66,992 tons, a decrease compared to the same period last year when the company's anode materials business achieved a shipment volume of 68,197 tons.

Shanghai Putailai explained in the semi-annual report that due to the short-term mismatch of supply and demand in the industry, the price of anode materials remained low, and the market price in some specialized areas was lower than the reasonable production cost. In addition, the demand from Europe did not meet expectations. The company appropriately reduced and controlled the shipment of some low-cost products, arranged the supply and sales of products reasonably, and ensured the long-term healthy development of the company, resulting in a decrease in revenue and sales volume of the anode materials business compared to the same period last year.

This means that in order to deal with the oversold market price, the leading enterprises in the anode materials industry have begun to reduce shipments. In March of this year, when BYD started to raise the ultra-low-price orders for leading anode material manufacturers, some industry insiders told reporters that the bottom of the anode market has been confirmed.

The situation in the anode materials industry is also a concern for most investors. "In recent years, due to the rapid release of new anode production capacity, the anode materials market has seen a phase of mismatch between supply and demand, and intensified market competition has led to a significant decrease in anode material prices." Liang Feng stated that overall, new entrants to the industry and their increased production capacity are difficult to form effective competition in the industry, and anode material prices have approached the cost line of production companies, and most companies have experienced losses. Due to reduced profits and tighter financing, the speed of investment in new production capacity in the industry has significantly slowed down, and it is expected that there will be limited space for further price reduction in the future.

Liang Feng further expressed that in the future, disadvantageous production capacity lacking differentiated product advantages, R&D advantages, and production cost advantages will face elimination, while leading enterprises with differentiated product advantages, R&D technology advantages, capital advantages, and overseas production capacity layout capabilities are expected to usher in a new round of industry consolidation opportunities.

Putailai also disclosed the progress of the anode material construction. Among them, the first phase of 100,000 tons of anode material in Sichuan Zichen is expected to start production at the end of 2024, and the second phase of 100,000 tons will complete the construction of the plant by the end of 2024.

In terms of the overseas layout of anode materials, Putailai executives stated that the preliminary design and planning of the annual production of 100,000 tons of lithium-ion anode material integrated production base project in Sweden Zichen have been initiated, and local approval work such as the registration and establishment of the project’s implementing body is being prepared.

High attention on the layout of "next-generation" battery materials

In addition to anode materials, investors have high attention to Putailai's layout of "next-generation" battery materials, including silicon-carbon anode and solid-state electrolyte.

In the interim report, Putailai has disclosed that the company has started the research and development of solid-state electrolyte materials in 2022, and has completed the pilot test of the solid-state electrolytes LATP (lithium aluminum titanium phosphate) and LLZO (lithium lanthanum zirconium oxide). The ionic conductivity of the product is up to 10^(-3) S/cm, the product particle size is controllable, and a pilot production line for 200 tons of solid-state electrolyte has been built at the Sichuan base.

At the earnings conference, some investors raised questions about whether the research and development of solid-state batteries still require anode materials and separators, and whether it will impact the company's business.

In response, Liang Feng stated that as a service provider that offers comprehensive material and process equipment solutions to downstream customers, the company has increased its research and development and industrialization collaboration work on various aspects of solid-state batteries. Currently, the industrialization process of pure solid-state batteries involves a multitude of technical, electrochemical performance, and cost issues. Existing lithium batteries and semi-solid-state batteries will remain the mainstream solution for a considerable amount of time. Solid-state batteries still require an anode, such as silicon-carbon and lithium metal anodes, which are areas in which the company excels. Some solid-state batteries do not require a separator, but require the coordination of electrolyte membranes and coating processes, which is also an area in which the company excels.

In terms of anode materials, Liang Feng said that the company has actively laid out in silicon-carbon anodes and lithium metal anodes. Among them, the new type of silicon-carbon anode can be used as anode material for semi-solid state/solid state batteries. Currently, it is progressing smoothly in customer introduction and the shipment volume continues to grow. The construction of Anhui Zichen's silicon-carbon anode production capacity is also underway.