The United States has made a preliminary decision to impose a staggering 712% countervailing duty (CVD) on Huizhou Kaixin Technology, the world’s fifth-largest Chinese anode material producer. Other companies face a 6.5% CVD, and an ongoing anti-dumping (AD) duty investigation signals a major crackdown on Chinese anode materials.
This development brings hope to South Korean battery material manufacturers, who have long struggled against China’s low-cost competition. However, the battery industry remains cautious, eyeing potential increases in production costs.
Foreign media reported on Friday that after investigating Chinese anode materials, the U.S. Department of Commerce has preliminarily decided to levy a 712% CVD on Huizhou Kaixin, which holds the fifth-largest global market share, and a 6.55% CVD on other companies.
Huizhou Kaixin’s hefty duty stems from its non-cooperation in the investigation, resulting in the most unfavorable tax rate estimation. The final ruling, slated for September 29, will follow additional data submissions and hearings.
Concurrently, the U.S. Department of Commerce is conducting a separate anti-dumping duty investigation. Following a preliminary decision in July, the final ruling is expected by year-end. The ultimate duty rate will combine both AD and CV duties.
This preliminary CVD decision is widely interpreted as America’s first major move to counter China’s dominance in the anode material market.
SNE Research reports that Chinese companies occupy all top ten spots in the global anode material market, based on 2024 shipment forecasts. South Korea’s POSCO Future M ranks 11th with a mere 1.3% market share, having slipped from 6th place in 2020 to outside the top ten since last year.
The potential finalization of high duties on Chinese anode producers could be a game-changer for South Korean firms, which China’s overproduction and aggressive pricing have outmaneuvered. Anode materials, crucial components accounting for 10-15% of battery costs, rely heavily on graphite, of which China produces 70% globally.
An industry insider commented that Chinese anodes have been 40-50% cheaper than South Korean products, putting South Korean firms at a significant disadvantage. If these duties are confirmed, it will boost the competitiveness of South Korean anodes and strengthen their position in the U.S. market.
Last month, POSCO Future M approved a 396.1 billion KRW (approximately 289 million USD) investment to establish Carbon New Materials Co. (tentative name). This move aims to process spherical graphite in-house, reducing reliance on Chinese imports. The company plans to source natural graphite from Australian and Tanzanian mines, leveraging supply contracts and investments made last year.
Meanwhile, the battery industry is closely monitoring the situation, wary of potential cost increases. With relatively lower CVDs imposed on companies other than Huizhou Kaixin, the sector is awaiting the outcome of the anti-dumping duty investigation.
A battery industry representative noted that if the final CVD remains in single digits, the impact on profitability should be manageable, even with slight cost increases. He explained that CVDs typically tend to be lower than anti-dumping duties.
South Korean battery makers are exploring alternatives such as lithium metal and silicon for anodes to reduce dependence on Chinese graphite. These materials offer higher energy density than graphite, potentially improving battery charging speeds and longevity.