China anode capacity race gathers pace as 2027 supply risks loom

Chinese anode material producers are pressing ahead with major capacity additions, buoyed by surging demand from energy storage systems and new energy vehicles.

The push is set to reshape trade flows for key upstream materials, including artificial graphite and needle coke, as integrated projects in China and overseas come online and producers seek to lock in cost advantages by building captive graphitization capacity.

Leading the charge, Ningbo Shanshan Co. said on Oct. 22 that it aims to raise up to 4 billion yuan ($599 million) as part of plans to build a 150,000 metric tons/year integrated lithium-ion battery anode material project in Baotou, Inner Mongolia.

About 2.5 billion yuan of the raised funds has been earmarked for the project, which has a total planned investment of 5.1 billion yuan and will also include 50,000 mt/year of dedicated graphitization capacity, the company said in a filing.

Construction is scheduled to begin in March 2027 and be completed by July 2028, though the project has yet to receive approval for its environmental impact assessment or obtain the land-use certificate required for development, Ningbo Shanshan said in its latest feasibility report.

Ningbo Shanshan first announced the project Sept. 23.

The company said its existing production capacity was insufficient to meet growing customer demand and that the integrated project would help improve supply stability and reduce production costs.

It also flagged graphitization as a critical bottleneck in anode production due to its high-energy intensity and significant contribution to processing costs.

Demand confidence

Ningbo Shanshan's fundraising comes as broader industry data underscores a recovery in China's anode sector.

China's anode material capacity utilization rate rose above 80% in the first half of 2026, up from around 70% in 2025, with some producers continuing to operate at full capacity, Ningbo Shanshan said, citing data from China-based research agency Gaogong Industry Institute.

China's anode material shipments reached 2.92 million mt in 2025, up 38.1% year over year, according to EV Tank data cited by Ningbo Shanshan, with artificial graphite accounting for 86.9% of total shipments, or approximately 2.54 million mt.

Rival producer Shijiazhuang Shangtai Technology has also echoed an upbeat tone.

Speaking at a recent investor meeting, Shijiazhuang Shangtai said it had not received negative feedback from customers or the broader market regarding demand in the fourth quarter or in 2027.

The company remains confident about the medium- and long-term outlook for the industry, it said.

Under current market conditions, Shangtai Tech said it expects to maintain full production while accelerating construction of new capacity and maintaining or increasing its use of outsourced processing to meet customer demand.

The company's capacity under construction includes its fourth- and fifth-phase projects in Shanxi, each with a planned capacity of 200,000 mt/year, as well as a 50,000 mt/year project in Malaysia.

The fourth-phase Shanxi project is nearing production start-up and is expected to operate for the full year in 2027, while the fifth-phase project is expected to start production in the second quarter of 2027, Shangtai Tech said.

Shangtai Tech expects its own anode material production capacity to exceed 700,000 mt/year in 2027.

Upstream, uncalcined needle coke prices, a key feedstock for artificial graphite anode materials, remained broadly stable, underpinned by elevated crude oil prices and firm downstream demand.

Platts, part of S&P Global Energy, assessed uncalcined needle coke with a maximum sulfur content of 0.5% at 8,100 yuan/mt DDP Qingdao on Oct. 22, unchanged week over week but 3.2% higher compared with a month earlier.

Oil prices have remained elevated, a Xiamen-based trader said, adding that higher production costs were supporting uncalcined needle coke prices.

The sustained firmness in needle coke pricing adds to cost pressures for anode producers relying on third-party processing, reinforcing the strategic logic behind Ningbo Shanshan's push to build captive graphitization capacity at its Baotou facility.