How hard is the negative material this year

Affected by the decline in the negative electrode material market, Shangtai Technology (001301.SZ) net profit in the first half of the same and the quarter fell.

Shangtai Technology today announced the 2023 semi-annual report, the company's first-half operating income of 1.967 billion yuan, down 10.52%; Net profit attributable to shareholders of listed companies was 405 million yuan, down 41.53% year-on-year, of which Q1 net profit was 230 million yuan, according to this calculation, Q2 net profit was 175 million yuan, down 23.91% from the previous quarter.

The company's semi-annual report disclosed that in the first half of this year, the new production capacity of the negative electrode material industry was gradually released, the structural overcapacity of production capacity was serious, and the market competition was increasing. In the context of supply and demand reversal, the overall operating rate of the negative electrode material industry is not high, the downstream customer demand is slow to boost, the inventory pressure is large, the average selling price continues to fall, the sales growth rate is generally slowed down, and the overall industry profit margin is significantly compressed compared with 2022.

It is understood that Shangtai Technology is mainly engaged in the independent research and development, production and sales of artificial graphite anode materials and carbon products, and the downstream is mainly used in power batteries and energy storage batteries, the semi-annual report shows that the company's negative electrode materials and carbon revenue accounted for 82.44% and 12.22% in the first half of the year.

The negative electrode material, which accounts for the majority of Shangtai Technology's main income, sold 52,200 tons in the first half of the year, and the gross profit margin of products fell 15.48pct to 31.10%. It is reported that Shangtai technology negative material integration effective production capacity of 240,000 tons/year, if the full production capacity calculation, sales for all production and excluding inventory, the company's capacity utilization rate in the first half of the year may not exceed 50%.

For the second half of the year, Shangtai Technology or hope that the demand brought by the energy storage market. In the semi-annual report, it was mentioned that the company's shipment share of negative electrode materials for energy storage batteries has increased. The company mentioned in the investor relations activity on June 20 that the shipments of negative electrode materials applied to energy storage batteries in the second quarter are in the climbing stage, and will be shipped in the third quarter, when the proportion of negative electrode materials shipments of energy storage batteries will be significantly increased.

Shangtai Technology also said that in terms of the current customer order situation, the company's operating rate and production scheduling plan are in an upward trend, and the third quarter will maintain a high operating rate, the production and sales rate is also maintained at a high level, and the shipment volume has increased significantly year-on-year and quarter-on-quarter.

However, Shangtai technology also believes that the price of negative electrode materials will remain low in the second half of the year, this "low price competition" situation will last for a long time, the industry pattern will face the longest cycle in history, the most competitive adjustment, the relevant production enterprises are facing greater "cost reduction and efficiency" pressure.

From the perspective of market supply, after a substantial expansion of production in the past few years, anode material manufacturers, including the head enterprises, entered the production capacity release period in 2023-2024, and the effective production capacity of the industry with the graphite chemical sequence as the core increased significantly.

According to Shangtai Technology's long-term plan for negative material production capacity, 500,000 tons of negative material production capacity will be formed after Shanxi Phase 4 is gradually put into operation in Q2 2024.

According to Longzhong Information data, 2023 negative material production capacity continued to release, as of the end of July, negative material new production capacity of 860,000 tons, the total production capacity approaching 3 million tons.