Finance Association, November 26 (Reporter Liu Yue) The lithium battery diaphragm industry is at a stage where production capacity is being cleared at an accelerated pace. The Battery Film Special Committee of the China Plastics Processing Industry Association (hereinafter referred to as the “Special Committee”) issued a proposal yesterday to battery separator manufacturers across the country, advocating that enterprises organize production activities according to market demand, actively control volume and follow the trend from both sides of production and marketing, and not fight price wars or share disputes.

The Financial Services Association reporter called Enjie Co., Ltd. (002812.SZ) and Xingyuan Materials (300568.SZ) as investors. Both companies expressed concern about the initiative. The latter believes that the initiative is conducive to promoting the healthy development of the diaphragm industry. Currently, many small manufacturers are losing money to ship, and subsequent prices will definitely return to a more rational state.

The special committee mentioned in the proposal that the current economic recovery is still facing many challenges. The main ones are that effective demand is still insufficient, business pressure is high, there are many hidden risks in key areas, the domestic cycle is not smooth enough, and it takes a rational view of the current state of the battery industry under the domestic cycle. Therefore, enterprises are encouraged to organize production activities according to market demand, actively control volume and reduce volume from both sides of production and marketing, do not fight price wars or share disputes, and achieve “no reduction in volume profit” or “increase volume profit” by strengthening supply-side control.

The special committee also proposed that enterprises strengthen inventory management, formulate shutdown, production reduction or maintenance plans in line with market demand, and improve the efficiency of enterprise operations by reducing resource consumption, reducing ineffective supply and inventory backlogs, so as to achieve effective development.

A staff member of the securities department of Enjie Co., Ltd. told the Financial Federation reporter who called as an investor that the company is concerned about this initiative, and the diaphragm industry is currently still in the stage where production capacity is being cleared at an accelerated pace. The company has always upheld the attitude of fair competition and the industry working together to maintain a healthy and good ecology.

Xingyuan Materials also paid attention to the initiative. A staff member of the company's securities department told the Financial Federation reporter who called as an investor that this initiative will definitely help promote the healthy development of the diaphragm industry. As a leading diaphragm company, the company will definitely not take the initiative to stir up a price war. “Since this year, the price of diaphragms has indeed been reduced. Many smaller manufacturers are making products at a loss of money, and there is not much room to continue to cut prices. Subsequent prices will definitely return to a more rational state.”

However, some industry insiders also told the Financial Federation reporter that the initiative only reflects the current state of the industry; it cannot change the current state of the industry. “Loss-making companies also need to operate to cover depreciation, employee compensation, bank loans, etc. Assuming that companies such as Ningde and BYD were to bid today, everyone would still have to kill each other.”

A lithium battery separator is a thin film between the positive and negative electrodes of a lithium battery. When a lithium battery undergoes an electrolysis reaction, the diaphragm can separate the positive and negative electrodes, prevent short circuits from occurring, and allow electrolyte ions to pass freely. As one of the four major materials for lithium batteries, the cost of the diaphragm accounts for about 10% of the cost of lithium-ion batteries. In recent years, the price of lithium carbonate, an upstream raw material for lithium batteries, has continued to drop. Downstream car companies' price war pressure has been transmitted, and the internal volume of power batteries has become an industry consensus. After a wave of crazy expansion, a new round of industrial “knockout matches” is being staged.

Judging from the performance, the three giants of lithium battery diaphragms are under pressure on their profits this year, and their performance has all declined sharply. Financial reports show that in the first three quarters of this year, net profit of Enjie Co., Ltd., Xingyuan Material and Sinoma Technology (002080.SZ) decreased by 79.41%, 47.66%, and 64.36%, respectively. Looking at a single quarter, the net profit of Q3 Enjie Co., Ltd., Xingyuan Material and Sinoma Technology decreased by 79.64%, 62.84%, and 54.51%, respectively.