EcoPro BM may cut battery materials capacity on EV slowdown

South Korea’s leading battery materials maker EcoPro BM Co. is considering reducing cathode output capacity despite continuous investments in future growth drivers amid sustained weakness in the global electric vehicle industry on sluggish demand.

EcoPro BM said on Tuesday its operating profit tumbled to 3.9 billion won ($2.8 million) in the second quarter from a year earlier with sales down 57.5% to 809.5 billion won.

“We are considering slowing down and cutting mid- to long-term cathode capacity, given recent sluggish growth and volatilities in the EV market,” said EcoPro BM Vice President Kim Jang-Woo, adding the company is set to unveil details in the second half once it makes a decision.

“We are keeping investments for localization requests by customers to meet regulations in Europe and North America,” Kim said.

EcoPro BM is building a cathode plant in Hungary with an annual capacity of 54,000 tons for mass production from 2025 while adding facilities in South Korea, including a precursor plant, for commercial operations next year as scheduled to expand its customer base.

The company also plans to improve its battery materials ecosystem through equity investments in Indonesian nickel producers or others to secure key ingredients.

EV and secondary battery makers have been suffering from weaker demand.

Samsung SDI Co., the world’s sixth-largest battery maker and EcoPro BM’s top customer, said its operating profit fell 37.8% to 280.2 billion won in the April-June period from a year earlier as revenue declined 23.8% to 4.5 trillion won on weak EV sales of European carmakers such as BMW and Volkswagen AG.

MARKET DIVERSIFICATION

EcoPro BM is in talks with new customers to supply premium high-nickel cathodes, high-voltage medium-nickel and low-cost cathodes, Kim said.

The company is also seeking to diversify cathode applications to other products such as energy storage systems (ESS) and power tools.

EcoPro BM’s sale volumes of cathodes for ESS and power tools jumped 85% and 46%, respectively, in the second quarter from the previous three months, although its total cathode sales volume dipped by 3.6%.

“We are paying attention to the ESS industry as a key demand sector for secondary batteries,” Kim said. “The ESS industry is expected to enjoy rising demand for global eco-friendly policies and artificial intelligence data centers, which will increase our sales volume in the second half.”

SIGNS OF STABILIZATION

EcoPro BM’s parent EcoPro Co. expected cathode prices to show signs of stabilizing in the third quarter.

EcoPro said prices of the battery materials made up of nickel, lithium and others, which comprise around 40% of the cost of EV batteries, are set to ease about 2% in the third quarter from the April-June period when cathodes prices tumbled 13% on-quarter.

The company suffered an operating loss of 54.6 billion won on a consolidated basis in the second quarter, swinging from a profit of 170.3 billion won a year earlier, as sales skidded 57.2% to 864.1 billion won.

“We had a difficult time managing profitability as we had to use expensive raw materials despite lower sales prices in the first half,” said Park Jae-ha, senior managing director of EcoPro.

Write to Sang Hoon Sung at uphoon@hankyung.com
 

Jongwoo Cheon edited this article.