Chinese battery materials producer Huayou announced a shift in its manufacturing strategy in response to the current market conditions. With a slowdown in electric vehicle demand and an increase in production, the company has identified a “phased and structural overcapacity” in the battery and raw materials market, leading to intense competition and falling prices for nickel and lithium.
In an effort to combat the challenging market environment, Huayou revealed plans to create a manufacturing system focused on extremely low cost, high efficiency, and energy efficiency. Vice President Wang Jun stated that cost-cutting measures are expected to save the company 1 billion yuan this year, helping to improve the debt-asset ratio and operational cash flows.
Despite reporting a drop in metal prices and higher financing costs in its first-quarter earnings report, Huayou remains optimistic about the future. The company saw a 14% year-on-year decrease in earnings in 2023, but believes the market will gradually transition into a more stable re-stocking phase this year.
Huayou’s inventory levels for lithium, copper, and nickel products saw significant increases last year, reflecting the surplus stock in the supply chain. However, the company anticipates a gradual improvement in market conditions.
With projects in Indonesia and Zimbabwe already in production, Huayou is looking to expand its presence in markets such as Japan, South Korea, Europe, and the US. The company supplies to major players in the electric vehicle industry, including Tesla Inc. and Contemporary Amperex Technology Co., and is optimistic about the future of battery materials demand as the industry continues to evolve.
