Is overcapacity already emerging? A billion-yuan lithium battery materials giant to halt operations at its ten-thousand-ton production line.

According to available information, this production base began construction in 2008 and is the company’s earliest facility. Its main infrastructure includes graphite furnaces and supporting facilities, office buildings, and staff dormitories. Based on the maximum graphite capacity achieved in 2022, the Lichengdao base’s anode material output reached approximately 1,152 tons per month—over 10,000 tons annually. Regarding the reasons for the shutdown, Shangtai Technology explained that, on the demand side, since the beginning of 2023, growth in new-energy electric vehicles has slowed. The power battery market has been affected by inventory reduction efforts, resulting in subdued production scheduling by lithium battery customers and consequently sluggish or even weakening demand for anode materials across the board. On the supply side, after several years of massive industry-wide expansion—including among leading industry players—producers of anode materials have entered a phase of capacity ramp-up. Effective industry capacity centered on the graphitization process has surged significantly, causing a reversal in the anode materials sector’s supply-demand balance and ushering in an era of overcapacity. Amid slower-than-expected demand growth and sharply increased supply, cost reduction and efficiency enhancement have become critical measures for the company to cope with intensifying market competition. Shangtai Technology stated that the Lichengdao base was built relatively early; its equipment and facilities are outdated and aging, resulting in low production efficiency and high comprehensive costs—rendering it uncompetitive. Moreover, the base’s remote location leads to inconvenient transportation and higher management costs. Halting production at this site will help the company reduce graphitization costs, improve management efficiency, lower operational and management expenses, further strengthen its cost leadership advantage, and enhance long-term profitability. Shangtai Technology noted that its current monthly graphite-integrated production capacity stands at approximately 20,000 tons, of which the Lichengdao base contributes up to roughly 1,152 tons per month—an insignificant share of total capacity.

Spreading! Leading chemical enterprises caught in a wave of shutdowns!

Ube Industries has halted major production lines at its factory in Ube City, Yamaguchi Prefecture, while also considering scaling down caprolactam output in Thailand and Spain. LG Chem announced plans to cease operations at its caustic soda production line in Yeosu, South Korea. Celanese’s Merksem plant ceased production permanently at the end of September 2024. Mitsui Chemicals plans to reduce the annual capacity of its TDI plant in Omuta, Japan, to 50,000 tons by July 2025, and will shut down its PET plant in Iwakuni-Ohtake, Japan—capable of producing 145,000 tons annually—in October 2024. SABIC’s Olefins 3 steam cracker in Geleen, the Netherlands, will be permanently closed. ExxonMobil plans to shut down a steam cracker and associated derivative units and logistics facilities at its Gravenchon site in France in 2024. Bayer plans to close its internal consulting division. Previously, Bayer disclosed intentions to shutter offices in Germany, the United States, Brazil, China, and Singapore. Sumitomo Chemical decided to close its cyclohexanone production facility at the Ehime Plant (Shinhamachi City, Ehime Prefecture) and exit this business entirely. Mitsubishi Chemical Group will shut down its ACH-process methyl methacrylate (MMA) monomer, acrylonitrile, and related derivatives (including chelating agents, acetonitrile, and ammonium sulfate) production lines at its Hiroshima Plant, and will discontinue chelating agent and acetonitrile businesses. Trinseo may close its polycarbonate (PC) production base in Stade, Germany, and has initiated consultation procedures with the works council of Trinseo Germany GmbH, expected to conclude by the end of 2024. Italy’s Eni Group will close its Livorno refinery in Italy for modernization upgrades. Covestro has suspended investment in its world-scale MDI plant and closed its polyether polyol plant in Kaohsiung, Taiwan. Kuraray plans to optimize capacity at its MMA plant within its methyl methacrylate resin business starting in July 2025—halving its current annual capacity of 67,000 tons, ceasing external sales, and reducing production capacity for ammonium sulfate and methyl methacrylate resin molding materials. Shell Nederland closed operations at its Moredijk Chemical Park, including a 900,000-ton-per-year ethylene cracker and a 510,000-ton-per-year propylene cracker. Clariant closed its sunliquid® bioethanol manufacturing plant in Podari, Romania, and scaled back activities related to its biofuels and derivatives business line in Germany. Lotte Chemical sold its 75.01% stake in Lotte Chemical Pakistan Limited (LCPL), fully exiting the purified terephthalic acid (PTA) business. It is evident that more than 20 chemical enterprises listed above—mostly based overseas, especially in Europe—are shutting down facilities. Europe currently ranks among the world’s most expensive regions for chemical production. Mounting environmental compliance pressures have driven production costs persistently upward. Coupled with high labor costs, elevated raw material and energy expenses, logistical bottlenecks, and rising transportation fees, overall operating costs have surged dramatically—severely squeezing profit margins and, over time, undermining the viability of numerous leading chemical enterprises. The domestic situation is equally grim: from upstream chemical producers to downstream electrical appliance and furniture manufacturers, dozens of decades-old factories have successively suspended operations, gone on extended holidays, or permanently shut down—highlighting how profoundly external shocks can disrupt normal corporate operations and underscoring shared challenges confronting the chemical industry.

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