HPA Coated Battery Separator Market Update
- Transition to HPA coated battery separators clearly evident
- 47% increase in quarterly sales volumes for HPA coated separators
- W-Scope increasing HPA coated separator production capacity
- South Korea a leader in HPA use for separators
W-Scope reported in its 4th quarter 2018 results that as a proportion of total sales, HPA coated separator sheets jumped to 51%, a volume increase of approximately 47% compared to an average sales volume of ~34% in the preceding four quarters (see Table 1 in link below).
The transition by lithium-ion battery manufactures to HPA coated separators is primarily a function of advances in battery anode and cathode technology. As a result, battery energy storage capacity is increasing and battery operating temperature during charge and discharge is higher - to the point where traditional non-coated polymer separator sheets are reaching the limit of safe application, hence the transition to HPA coated separators which tolerate higher operating temperatures (refer Altech's ASX Announcement of 6 June 2018). The transition to HPA coated separators has been anticipated for some time, however the quarter 4, 2018 W-Scope sales data indicates that the transition may be progressing at a rate faster that previously envisaged.
W-Scope announced two years ago that it was doubling its HPA coated separator business due its anticipation of increased demand for its coated separators from lithium-ion battery manufacturers that supply the electric vehicle and consumer goods industries. This investment appears to be well founded, as in its investor update published in mid-February 2019, W-Scope announced annual sales revenue guidance of ¥17.5bn for 2019, which compares to actual annual sales revenue of ¥8.7bn for 2018, a year-on-year increase of 100%. And for 2020, W-Scope has forecast a further increase in expected sales revenue that is 50% above its 2019 guidance, primarily on the back of capital expenditure for four additional HPA coated separator sheet production lines in response to coated separator sheet supply contracts associated with the electric vehicle industry. Nearly 60% of W-Scope's sales are to South Korea.
Most battery separator sheet manufacturers are business units within large conglomerates and/or are not listed on a stock exchange and consequently they do not publish detailed sales data. W-Scope, as a public company with its shares quoted on the Tokyo Stock Exchange, does publish detailed sales data and Altech monitors its published information to assist it in understanding current trends in the battery separator sheet market. W-Scope has a ~10% share of the global battery separator sheet market.
Altech was a recent exhibitor at the Battery Japan 2019 conference in Tokyo, Japan. The Company continues to work with its off taker, Mitsubishi Corporation to build brand and product awareness. Delegates at the conference reported strong demand for HPA from South Korea and Japan. South Korean battery manufacturers like LG Chemicals produce around 10 different types of coated separators and use between 3,000tpa - 4,000tpa of HPA, its primary HPA suppliers appear to be Sumitomo Chemicals and Nippon Light Metal. Other major lithium-ion battery producers in South Korea include SK Innovation and Samsung SDI, Samsung is also a major user of HPA for its coated separators.
At Battery Japan 2019, the Altech booth attracted considerable interest as there appears to be heightened concern about the perceived limited additional supply of high quality HPA from established producers. There was also feedback from battery manufactures that HPA is now being incorporated within lithium-ion battery cathode's as it aids with battery temperature tolerance and reduces dendrite (crystalline mass) growth. Although this is an early stage innovation, it is nevertheless adding to HPA supply and quality concerns, and it is another potential area of demand growth for HPA.
The global transition to electric vehicles now seems unstoppable. Toyota has announced that it is aiming to achieve annual sales of 5.5 million electrically driven vehicles by 2030; General Motors has plans to launch more than 20 electric vehicle models by 2023; Tesla, the highest profile electric vehicle manufacturer in the world is expecting between 700,000 and 1,000,000 of its electric vehicles to be sold in 2019; whilst German car-makers BMW and VW are expected to launch over 100 new electric vehicle models over the coming 6 years. The demand for HPA, which is currently estimated at 1.5kg - 1.7kg per electric vehicle, should be positively impacted by the migration to electric vehicles, underpinning the forecast rise in global HPA demand from current levels of ~26,000tpa to a conservative demand estimate of in excess of 60,000tpa by 2025. From its recent discussions at various battery conferences, Altech understands that the price of high quality 99.99% HPA in Japan remains unchanged at ~US$40,000/tonne.
To view tables and figures, please visit:
About Altech Chemicals Ltd
HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire. Synthetic sapphire is used in the manufacture of substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components. There is no substitute for HPA in the manufacture of synthetic sapphire.
Global HPA demand is approximately 25,315tpa (2016) and demand is growing at a compound annual growth rate (CAGR) of 16.7% (2016-2024), primarily driven by the growth in worldwide adoption of LEDs. As an energy efficient, longer lasting and lower operating cost form of lighting, LED lighting is replacing the traditional incandescent bulbs.
Altech Chemicals Ltd