(Yicai Global) Dec. 13 -- Shares in Lecron Industrial Development Group surged as much as 14.8 percent today after the Chinese chemical producer said it will supply battery giant Contemporary Amperex Technology with two chemical compounds needed to make the batteries for electric cars.

Lecron’s share price [SHE:300343] closed up 4.27 percent at CNY20.75 (USD3.30). Earlier in the day it had reached CNY22.86. CATL’s stock price [SHE:300750] gained 2.88 percent to end the day at CNY658.36 (USD103.50).

Lecron will supply Ningde, Fujian province-based CATL with Freon-142b and polyvinylidene difluoride from now until the end of 2024, it said yesterday.

The purchase volume of Freon-142b, a raw material used to make polyvinylidene difluoride whose production is limited due to environmental concerns, will be no less than 1,700 tons before the end of this year and around 7,200 tons per year after that, the Zibo, northeastern Shandong province-based firm said.

Based on today’s market price of CNY180,000 (USD28,287) per ton, just the Freon-142b sales through to the end of next year will bring in CNY1.6 billion (USD251 million), more than the company’s entire revenue of CNY1.2 billion in the first three quarters.

No purchase amounts for polyvinylidene difluoride, which is used to bond the battery's anode and diaphragm, were given. But the material is in short supply due to technical barriers and the production quotas on Freon-142b. Prices have gained seven-fold in the past year, according to industry analysis firm Baiinfo. There is no substitute available at the moment.

As a result, Lecron has started building a new plant with an output of 8,000 tons of polyvinylidene difluoride a year. Phase one, which has an annual capacity of 3,000 tons, started trial operations in August.

Editor: Kim Taylor