Analysis of the Economic Operation of the Battery Industry in the First Half of 2016

Subject to the influence of the international trade environment, the import and export of the battery industry declined in the first half of the year. According to customs statistics, the cumulative export volume of the national battery industry has dropped by 2.44% year-on-year. Completion of imports decreased by 4.70% year-on-year.

Recently, the country has continuously increased its support for the new energy industry, which has helped battery companies to recover their profits, effectively overcoming multiple external pressures such as slowdown in the macro economy, slow growth in external demand, and rising production costs. The major economic indicators such as business income and profit kept growing. According to statistics from the National Bureau of Statistics, in the first half of the year, the total revenue of the main battery business in the country has increased by 16.86% year-on-year. The accumulative total cost of main business operations increased by 14.51% year-on-year. As revenues grew faster than cost growth, the total accumulated profits of the battery industry in the country increased by 47.03% year-on-year, and the main business income profit margin was 5.62%, up 1.15 percentage points year-on-year. In the first half of the year, the number of loss-making enterprises completed in the national battery industry was 271, a year-on-year decrease of 10.56%, a significant decrease from the 336 loss in the first quarter; the cumulative loss of the battery industry in the first half of the year was 21.09%, a year-on-year decrease of 2.49 percentage points. 16.25 billion yuan, a year-on-year increase of 0.22%.

What needs attention is that the rapid development of new energy vehicles has driven the demand for blowout of power lithium batteries. According to statistics from the National Bureau of Statistics, from January to June 2016, lithium-ion battery output increased by 20.66% year-on-year; main business revenue increased by 26.95% year-on-year, accounting for 49.06% of the battery industry; total profit increased by 89% year-on-year. The proportion of profits reached 60.16%, an increase of 10.1 percentage points from the 2015 total profit.

According to the "Energy Conservation and New Energy Vehicle Industry Development Plan" released earlier, by 2020, the cumulative production and sales of new energy vehicles in China will exceed 5 million, and the production capacity will reach 2 million, and the demand for power batteries will exceed 100 GWh. This is undoubtedly an attractive cake for the power battery industry. At the capital and the manufacturer level, the action of snatching the cake has started quietly.

The market environment facing the battery industry in the second half of the year is expected to further improve, but there may be volatility. The market fundamentals of the domestic demand market are generally good. As the country continues to increase support for the new energy industry, the income of urban and rural residents has steadily increased, and the growth rate of domestic battery consumption is expected to increase steadily in the first half of the year. On the international front, economies such as the United States and Europe have been weak. In the first half of this year, the US gross domestic product grew at an annual rate of 2.2%, which is lower than the 2.5% growth rate in the same period of last year. The turmoil in the Middle East lasted for several years and had a negative impact on the European economy. In addition, the “Brexit in the United Kingdom” caused great uncertainty to the European economy. It is almost impossible for Japan to undergo a fundamental change in the second half of 2016. Japan's economic recovery has no hope and Japan will continue to maintain low-speed growth. The demand for foreign batteries will continue to decline in the second half of the year.

Although there are still many unfavorable factors such as the continued increase in labor costs, the introduction of lead-acid battery consumption tax, and the continuous improvement of energy conservation and environmental protection requirements in the second half of the year, the battery industry will continue to overcome difficulties and ensure the stable and healthy development of the industry.

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