| Work Detail |
Battery facilities in the United States are threatened by the imposition of antidumping and countervailing duties on active anode materials. The active anode materials (AAM) supply chain is dominated by Chinese producers, and attempts to establish the entire supply chain outside of China are years away. The threat of a significant increase in battery costs for stationary applications in the United States looms. Higher tariffs are expected to be imposed after the Department of Commerce and the International Trade Commission (ITC) settle an antidumping and countervailing duty (AD/CVD) complaint regarding active anode materials (AAM) used in the production of lithium-ion battery cells. In December 2024, a coalition of U.S. battery material producers petitioned to impose duties on Chinese imports of AAM. The petitioners are seeking tariffs of up to 920% on AAM, which would significantly increase the cost of lithium-ion batteries in the country. In its ESS Price Forecasting Report, Clean Energy Associates forecasts that containerized battery prices will increase in 2025, primarily as a result of tariffs and AD/CVD duties. A preliminary ruling was issued on Friday to continue investigations into active anode material from China. Stationary implications Lithium iron phosphate (LFP) batteries account for more than 90% of stationary applications in the United States, according to battery analyst Rho Motion. With a very limited LFP production footprint outside of China, tariffs on AAMs are likely to have a significant impact on battery packs and systems in the United States. Iola Hughes, head of research at Rho Motion, told ESS News that if imposed at the 920% level proposed by the petitioners, LFP battery prices could skyrocket. “A 920% tariff is outrageous, and would take the economics of storage applications out of the picture,” Hughes said. However, AAM currently accounts for only 10-15% of the cost of the LFP battery system. “For a standard LFP battery, if the tariff were applied to the AAM within the cell, at a tariff level of 150% it would rise to 22% of the cost, and at a level of 920% it would rise to 55%,” he added. He added that the general consensus in the industry is that the tariff will likely be around 150%. AAM Supply Chain Lithium-ion battery production can use either synthetic or natural graphite material. Both supply chains are dominated by Chinese producers. According to Hughes, China accounts for an average of 92% of the synthetic and natural graphite supply chains. Chinese AAM suppliers have established production facilities in Southeast Asia, including Malaysia and Indonesia. Both Japanese and South Korean suppliers have plans to establish integrated production facilities and have seen increasing interest in offtake agreements, Benchmark Mineral Intelligence reports. In a webinar hosted by investment bank Roth Capital Partners, Benchmark’s Tony Alderson said that despite these efforts, parts of the AAM supply chain remain dominated by Chinese producers. Up to 86% of natural spherical graphite destined for anodes is produced in China, and manufacturers in Japan and Korea frequently use the material in their production. “It will be very difficult to get enough commercial material [for active anodes] that doesn’t have any material touched by China throughout the supply chain,” said Alderson, a principal analyst for anode and cathode material at Benchmark. “All [anode] chemistries are dominated by the Chinese domestic market now and are expected to be dominated through 2030.” Synthetic graphite With AAM synthetic graphite production growing, the market is currently oversupplied, Alderson reports. 97% of the final AAM synthetic graphite product comes from China, consistent with LFP battery production. Rho Motions Hughes said establishing synthetic graphite AAM production outside of China would take two to three years, while establishing a natural graphite AAM mine and processing operation could take more than five years. Since most of the AAM for stationary products would be incorporated into LFP batteries and packs, Hughes wondered whether there would be issues with tariff enforcement. The Department of Commerces preliminary antidumping determination is scheduled for May 26, 2025, and the preliminary countervailing determination is scheduled for March 12, 2025. |
