LG Chem, POSCO Chemical, Ecopro BM, etc.
Operating Profit Growth Rate 200~300%
[Asia Economy Reporter Jeong Dong-hoon] Cathode material manufacturers, which are battery material companies, posted operating profits exceeding 1 trillion won last year.
Domestic cathode material manufacturers LG Chem Advanced Materials Division (estimated operating profit of 1 trillion won), POSCO Chemical (165.9 billion won), and EcoPro BM (382.5 billion won) recorded operating profits exceeding 1.5 trillion won. Including the performance of mid-sized and small companies such as L&F and Cosmo Advanced Materials, it is expected that domestic cathode material companies earned nearly 2 trillion won last year.
Cathode materials are key components that account for 40-50% of the battery price. Along with anode materials, electrolytes, and separators, they are called the four core materials. They affect battery capacity and average voltage. Using good cathode materials increases driving range and output. Batteries using high-quality cathode materials travel farther and make electric vehicles more powerful. With the opening of the North American electric vehicle market, automakers such as GM and Ford, along with finished battery cell companies, are among the first to reach out to cathode material companies.
POSCO Chemical recorded consolidated sales of 3.3019 trillion won and operating profit of 165.9 billion won last year. Compared to the previous year, sales increased by 66% and operating profit by 36.3%. Sales of cathode materials for electric vehicles and energy storage systems (ESS) increased, and prices rose, resulting in record-high performance. The world’s largest cathode material plant in Gwangyang, Jeonnam, with an annual production capacity of 90,000 tons, will start operation this year, and the first phase of the 30,000-ton annual capacity cathode material plant in Pohang, Gyeongbuk, will be completed within this year. The supply of high-nickel cathode materials worth 13.7697 trillion won, contracted last year with Ultium Cells, a joint battery company of LG Energy Solution and GM, will also begin this year. This indicates a high possibility of further sales growth.
Battery cathode material company EcoPro BM also recorded record-high performance last year with sales of 5.3569 trillion won and operating profit of 382.5 billion won. These figures represent increases of 260.6% and 232.5%, respectively, compared to the previous year. The Ochang plant in Chungbuk, which experienced an explosion accident in January last year, is scheduled to resume operations this year. The new CAM7 plant of EcoPro EM, a cathode material affiliate jointly established with Samsung SDI, will start mass production with an annual capacity of 54,000 tons in the first quarter of this year. LG Chem appears to have ridden the growth trend of its subsidiary LG Energy Solution. The securities industry expects LG Chem’s Advanced Materials Division to have recorded sales of about 8.2 trillion won and operating profit of 1 trillion won last year. Sales increased by 70% and operating profit by more than 330% compared to the previous year.
This performance is due to the sharp rise in cathode material prices caused by soaring mineral prices. Battery and material prices are contracted to reflect fluctuations in mineral prices in sales prices with a lag of 2-3 months. The purchase price of cathode materials by the three domestic battery companies manufacturing finished battery cells in the first half of the year more than doubled compared to 2021. As of the third quarter of last year (estimated at the average exchange rate at the time), LG Energy Solution purchased cathode materials at $43.52 per kg (about 55,327 won). This price more than doubled from $21.81 per kg (about 24,973 won) in 2021. Samsung SDI’s purchase price also rose from $26.36 per kg (about 30,184 won) to $46.82 per kg (about 60,570 won) during the same period. SK On’s price increased from 27,952 won per kg to 67,800 won per kg.
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