[Bojo, Battery] From the Chasm to US Election Risks... Korea's Anode Materials Face 'Export Cliff' in the Second Half of This Year

Export Volume in Q3 This Year Decreases by 22% Compared to Previous Quarter

*Data from October 1 to 20

The export volume of cathode materials, a barometer of the battery industry, dropped by about 22% in the third quarter of this year compared to the previous quarter. The battery industry, which is experiencing a downturn due to the electric vehicle chasm (growth industry demand stagnation), is interpreted to be facing an export and production cliff amid the added risk of the US presidential election.

According to the Korea Customs Service's export-import trade statistics on the 23rd, the export volume of ternary battery cathode materials such as NCM (Nickel-Cobalt-Manganese) and NCA (Nickel-Cobalt-Aluminum) in the third quarter (July-September) of this year was a total of 47,169 tons. This is the lowest figure since the fourth quarter of last year, when the electric vehicle chasm began in earnest. Compared to 56,943 tons in the first quarter and 61,052 tons in the second quarter of this year, it decreased by 17% and 22%, respectively. Domestic cathode material exports have shown a trend of gradual recovery after plunging from 75,942 tons in the third quarter of last year to 47,643 tons in the fourth quarter.

Cathode materials are a key component accounting for about 40% of the battery cost. The exported cathode materials head to battery cell production plants in major electric vehicle demand regions such as Europe and the United States. The export volume of domestic cathode materials serves as a barometer for future battery cell and electric vehicle demand. Due to the sharp drop in cathode material exports in the fourth quarter of last year, the industry anticipated a decline in the performance of battery cell companies this year.

The battery industry views the decrease in cathode material exports in the third quarter as a result of the US presidential election risk. The outcome of the US election will determine the direction of eco-friendly policies such as the US Inflation Reduction Act (IRA). Accordingly, companies producing the final product, electric vehicles, appear to be first depleting their battery inventories. A battery industry official said, "In the third quarter of this year, amid increased election risks, electric vehicle and battery companies reduced production and maintained a 'calm before the storm' atmosphere," adding, "It seems that direction can only be set after the risk is resolved." If Donald Trump, the Republican presidential candidate advocating for the repeal of the IRA, is elected, the growth trend of the electric vehicle and battery industries is likely to be curtailed in the short term.

The provisional export volume of cathode materials from the 1st to the 20th of this month was only 8,573 tons, about half of last month's 16,960 tons. This suggests a high possibility of sluggish cathode material exports in the fourth quarter as well. Hyunwook Lee, a researcher at IBK Investment & Securities, evaluated, "The third-quarter performance of battery companies is expected to be poor," and added, "Although the fourth-quarter shipment guidance indicates an increase compared to the third quarter, there is insufficient basis for the shipment increase."