(Yicai) June 8 -- Contemporary Amperex Technology, the world’s largest battery maker, has placed a large order for lithium battery electrolytes with Capchem Technology, which should help the Chinese supplier improve its standing in the battery supply chain.

CATL will buy 50,000 tons of lithium battery electrolytes this year, 100,000 tons next year, and 150,000 tons in 2028, Shenzhen-based Capchem announced late yesterday, adding that the order should also strengthen the long-term partnership between the two.

Capchem did not reveal the value of the deal. Based on a rough market price of about CNY27,000 (USD3,980) for lithium iron phosphate battery electrolyte, its would be worth roughly CNY8.1 billion (USD1.2 billion).

Chinese battery material makers are signing long-term supply contracts to secure electrolytes. Last week, Tinci Materials Technology said it had agreed to nearly double supply of lithium battery electrolytes and component chemicals to Cornex New Energy to at least 1.01 million tons by 2030.

Capchem is one of China’s leading electrolyte suppliers. The company produced 529,300 tons of battery chemicals last year and sold 538,100 tons, according to its annual earnings report. That business generated revenue of CNY6.7 billion, accounting for 69 percent of the total.

Capchem’s shares [SHE: 300037] closed down 3.6 percent at CNY73.26 (USD10.79) today, while the benchmark Shenzhen Component Index sank 3.2 percent. Driven by strong product demand, the stock has surged about 41 percent year-to-date, and it is trading close to a five-year high.

Editor: Futura Costaglione