S Korea’s Posco sees EV demand rising despite Covid-19
Published date: 24 April 2020
South Korean battery materials maker Posco Chemical expects global demand for electric vehicles (EVs) to continue rising at a rapid pace, even as the Covid-19 pandemic wrecks economies around the world, because increasingly strict environmental regulations will drive more sales gains.
Worldwide EV sales growth will accelerate this year and continue climbing steadily, with the market increasing to more than 12mn units in 2025 from 2.21mn in 2019, Posco Chemical said. The EV segment will account for an estimated 14pc of total car sales by 2025, up from around 2.5pc last year.
Sales rose at a relatively modest rate of 10pc last year as the world's largest EV market, China, slowed. Posco Chemical sees battery materials demand in China starting to grow again, helped by an extension of government EV purchase subsidies beyond this year and the introduction of more high-value models by carmakers.
Posco Chemical expects nickel prices to rise in the years ahead amid a lack of investment in high-grade smelting. Gains in the EV battery segment will more than make up for possible declines in stainless steel demand as economies slump, the company said. But it sees cobalt prices being weakened by excess supplies as new sources of production come on stream and battery makers increasingly use low-cobalt cathodes.
With its bullish EV market outlook unshaken by Covid-19, Posco Chemical is rapidly expanding its production to help meet its goal of capturing a 20pc share of global battery materials sales. The company plans to expand its capacity to produce cathode materials to 65,000t in 2022 from 15,000t in 2019, while natural graphite anode materials capacity will jump to 90,000t from 44,000t in the same timeframe.
Posco Chemical had 2022 capacity targets of 59,000t for cathodes and 74,000t for anodes just three months ago. It also plans to add production of 16,000t of synthetic graphite anodes in 2023. The company said it has changed from a strategy of investing in new capacity after securing pre-orders to expanding more quickly to keep pace with global materials demand.
Posco Chemical's battery materials sales in the January-March quarter climbed by 46pc from a year earlier to 87bn won ($70.4mn). The segment accounted for 23pc of the company's total sales, up from just 9pc in last year's first quarter.
