Korean battery material manufacturers see decline in utilization rates

[Photo by Yonhap]

South Korea’s battery material manufacturers are facing challenges as their utilization rates decline amid slowing demand for electric vehicles (EVs).

According to the conglomerate circle and semi-annual reports released by Korean companies on Sunday, battery material companies saw a sharp decline in utilization rates due to sluggish EV sales.

SK nexilis Co., a key producer of copper foil for batteries, reported an average utilization rate of 34.5 percent in the first six months of this year, down by 20.2 percentage points from last year’s average of 54.7 percent.

The company said nearly two-thirds of its facilities remain idle.

Lotte Energy Materials Corp. which focuses on the manufacturing and production of copper foil, also saw its utilization rate come to 77.6 percent in the first half of this year.

The figure is similar to the average level of last year but it is 20 percentage points lower compared to the 97.5 percent utilization rate in 2022.

One of the biggest factors behind utilization rate decline is the struggles faced by battery manufacturers, a key customer group for the suppliers.

The average utilization rate among domestic battery producers dropped to 50 percent in the first half.

LG Energy Solution Ltd. noted in its latest report that the average utilization rate of its battery plants was 59.4 percent, down by about 10 percentage points from last year.

SK on Co. also reported an average utilization rate of 53 percent for all its factories in the first half, a significant decrease of 34 percentage points from a year ago.

“Although there is high uncertainty in the EV market, we are looking for opportunities for a turnaround in markets such as North America,” said an official from a battery material company.