China's anode capacity continued to expand back in 2025, but the growth rate slowed down. The production of anode materials increased significantly year-on-year, with artificial graphite anode remaining the mainstream variety, primarily driven by active demand growth. Meanwhile, anode capacity utilization rates also rose compared to the previous year.
In detail, China's anode material production reached 2.59 million tonnes in 2025, a 37% year-on-year increase. Among them, artificial graphite anode technology is relatively mature, with long cycle life, high safety, and lower cost, making it suitable for power and energy storage batteries. Therefore, when orders for energy storage batteries grew rapidly, the demand for artificial graphite anode was significantly boosted. Currently, it accounts for 89% of total anode materials production, an increase of 2 percentage points from the previous year.
Natural graphite anode has low energy consumption in the production process and good low-temperature performance, but its rate capability is poor, and it is prone to deformation, with performance inferior to artificial graphite. In this case, its market demand has gradually declined. Coupled with lower processing margins, its market share has been continuously shrinking, currently accounting for 10% of the market.
Mesophase carbon microbeads were the main variety of anode materials in the early stages, but due to low energy density and high cost, they have gradually been replaced by graphite-based anode products, holding a minimal market share at present. Some mesophase carbon microbead anode companies have also shifted to artificial graphite anode.
In 2025, silicon anode saw breakthroughs mainly in CVD vapor deposition technology, with rapid growth in capacity launching. However, due to the high cost of silicon and its tendency to inflate, commercial application remains limited, though it holds the greatest future development potential. Hard carbon anode has developed alongside the use of sodium-ion batteries. The manufacturing cost of hard carbon anode is high, and the quantity available has been limited, with few manufacturers currently capable of producing hard carbon anode.
In 2025, the expansion of anode material capacity was primarily driven by leading anode companies aiming to improve integrated processes and expand market share, while expansion by small and medium-sized enterprises was limited, leading to a significant slowdown in capacity growth rate.
The majority of the newly added anode capacity was built in 2024 and was gradually put into operation in 2025. Leading enterprises in this regard were mainly Shanshan (Sichuan), Shangtai (Shijiazhuang), Kaijin (Guizhou), and Zichen (Sichuan).
The now effective capacity is concentrated in the southwestern region of China, leveraging the advantage of regional green electricity to reduce costs. Additionally, Gotion High-tech's entry into anode materials and the stable release of capacity from anode leader Sun-stone contributed to the market expansion.
Looking ahead, it is estimated that China's monthly production of anode materials in 2026 will likely average 270,000 tonnes per month, an increase of 28.6% compared to 2025. Monthly capacity utilization rates are expected to average 71%, an increase of 7 percentage points from 2025.
Source: Mysteel OilChem
Throughout 2026, the monthly production of anode materials is projected to be lower in the first quarter, rebound in the second and third quarters, and slightly decline in the fourth quarter. It is estimated that monthly anode material production in 2026 will range between 230,000 and 310,000 tonnes, with total annual production projected to be around 3.26 million tonnes.
In the first quarter of 2026, influenced by the halved purchase tax policy for electric vehicles, the demand in the power sector is expected to contract. Coupled with the traditional off-season impact of the Chinese New Year holiday, the monthly production among anode enterprises will remain low.
In the second and third quarters, anode demand is anticipated to gradually recover, with the third quarter being the traditional peak season. Factors such as demand from power batteries and energy storage batteries continue to improve anode material production, leading to palpable growth. Overall, anode material production in the second half of the year is expected to be higher than in the first half.
Compared to 2025, the total consumption in 2026 is projected to growth 21% to around 3.23 million tonnes. The growth rate of energy storage batteries is expected to exceed that of power batteries, with an annual growth rate of 33% for energy storage batterie and 27% for power batteries.
In 2026, downstream demand for anode materials is expected to maintain rapid growth, primarily driven by energy storage and power applications.
The incremental consumption from power batteries is projected at 390,000 tonnes, as the penetration rate of EVs continues to rise. China's power battery industry has achieved positive results in market scale, technological innovation, and supporting systems, becoming an important force in promoting the green, low-carbon transformation and sustainable development of the automotive industry.
The incremental consumption from energy storage batteries is projected to be 170,000 tonnes. According to the Special Action Plan for Large-Scale Construction of New Energy Storage (2025-2027), the installed capacity of energy storage system by 2027 shall reach 180 million kilowatts of and drive investment of approximately Yuan 250 billion.
The incremental consumption from consumer batteries is estimated to hit 40,000 tonnes, as the rapid development of the low-altitude economy (drones, aircraft, etc.) provides new application scenarios for consumer batteries. National policy support for new energy, smart terminals, and other fields accelerates the expansion of the consumer battery market.
That is, the total downstream consumption in 2026 is projected to increase by 570,000 tonnes, a 21% growth compared to 2025.
In 2026, China's total anode material production is projected to be 3.26 million tonnes. Including approximately 15,000 tonnes of imports, total supply is expected to reach 3.275 million tonnes. On the downstream side, consumption from major sectors such as power, energy storage, and consumer batteries is anticipated to reach 3.23 million tonnes. Overall, the annual supply-demand gap is projected to be around 45,000 tonnes, indicating a relatively balanced supply and demand dynamics.
It should be noted that the above monthly supply-demand balance for anode materials in 2026 is based on comprehensive calculations, primarily considering domestic anode material and downstream new capacity plans, and referencing historical monthly production and demand fluctuations, combined with import and export data assessments.
Written by Aggie Hu, huchenying@mysteel.com
