3C Will Remain the Major Consumer of Lithium Batteries and Alternative Fuel Vehicles Are Likely to Bring Breakthroughs

Date: 2015-08-29

Electronic chemical products have wide applications and new technologies are developed and promoted very quickly. More and more capacities are being relocated to China given the rich raw materials, cheap labor costs and close proximity to downstream demand.

Lithium battery materials are the electronic chemical products with the most promising outlook. We believe upstream material suppliers will focus on key technologies and high-end customer exploration, and midstream cell producers will make forays into assembling & packing and intensify competition against assembling & packing companies. 3C will remain the major consumer of lithium batteries, and alternative fuel vehicles are likely to bring breakthroughs.

Expansion of lithium battery material capacity is about to lose steam and the industry downtrend is going to reverse. Despite modest price declines, sales volume of lithium battery materials has maintained strong momentum and the entire industry is about to recover and embark on a fast growth track. We expect China’s share of profit from the major four materials (cathodes, anodes, electrolytes and separator as a percentage of the global total to increase from the current 32% to 45% by 2016 and the gross margin differential with Japanese and South Korean companies to narrow from the current 14ppt to 10ppt. Chinese companies are moving up from the bottom of the global value chain. 

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