Battery copper foil market in China heats up

Industry insiders point out that a large number of small and medium-sized copper foil companies in China are currently adopting low-price competition strategies to seize the market, resulting in extremely volatile prices in the lithium battery copper foil market. While the battery factories benefit from the lower prices.

In 2020, China’s lithium battery copper foil market is entering a period of strong competition. On the one hand, the impact of the epidemic caused the production and sales of new energy vehicles to dive in the first quarter, the installed capacity of power batteries plummeted, and the demand for lithium battery copper foil was much reduced. The shipments of copper foil companies in the first quarter generally fell by 30% to 50%.

On the other hand, there are currently more than 30 lithium battery copper foil companies on the market and their number is still increasing, despite the high concentration of the market share. A large number of copper foil companies have adopted low-price competition strategies in order to survive, with battery companies price pressures further contributing to the squeeze on the profits of copper foil companies.

Lithium battery copper foil executives told Relevant Research that due to the weak downstream demand and the tough competition in the market, the price of lithium battery copper foil fell significantly in 2020, and the margin fell by about 30%.

Under this circumstance, copper foil companies are also actively adjusting their market strategies and actively exploring other market segments such as 5G base station backup power batteries, electric bicycle lithium batteries, and utility energy storage. At the same time, they are also accelerating the research and development regarding mass production of thinner 4-5μm ultra-thin copper foil to enhance its product profitability and market competitiveness.

Overall, lithium battery copper foil companies will face greater pressure and challenges this year. Among them, the market share of top Chinese copper foil companies such as Noord, Jiayuan Technology and Lingbao Huaxin is expected to increase further, and a group of small and medium-sized copper foil companies that do not have competitive advantages in products, technology and customer structure may be pushed out from the market.

Affected by coronavirus, the Chinese new energy vehicle production and sales and the installed capacity of power batteries fell sharply in the first quarter of 2020, which directly led to a sharp decline in orders and shipments of upstream lithium battery raw material companies.

Senior copper foil companies executives told Relevant Research that domestic demand and shipments of lithium foil fell sharply in the first quarter, and shipments generally fell by about 50%. Copper foil enterprises faced great pressure and challenges just for survival.

Moreover, due to the instability of new orders and production conditions of power battery companies and the unstable demand for copper foil purchases, copper foil companies remain extremely passive in terms of production and delivery.

“The delivery date requirements of customers during the epidemic are changing at any time and cannot be unified, so we can only adjust to the production rhythm of the customer.” – one of the interviewed executives said. 

Although the current power battery market is showing a recovery trend, it is still significantly lower than the same period last year. The current battery companies’ demand for copper foil purchases is not strong, and the overall market recovery will take some time.

“The shipment of lithium battery copper foil in the second quarter will increase compared with the first quarter, but the increase will not be too large, and the overall market demand has not recovered significantly.” Yin Dawei,general manager of Tongguan Copper Foil,said. He also claimed that although the current domestic epidemic has been controlled, it has not been completely eliminated and the overall situation in the industry is still not clear.

However, in the long run, under the favorable conditions such as the continuation of the subsidy policy and the opening of new infrastructure, the post-epidemic era power battery market and 5G base station batteries should continue to maintain long-term stable growth, and thus generate strong demand for lithium battery copper foil.

“Domestic copper foil market demand is expected to stabilize in the second quarter, recover significantly in the third quarter, and truly take off in the fourth quarter.” Chen Yubi, executive vice president of Noord said. He believes that this year’s lithium battery copper foil market demand may be the same as last year, but next year there will be explosive growth.

6μm copper foil processing fee fell by 30%

At present, the power lithium battery copper foil market is dominated by 8μm. However, under the requirement of increasing energy density, battery companies are accelerating the replacement with 6μm copper foil.

According to our research, there were more than 30 lithium battery copper foil facilities built in China in 2016-2019. In addition to the main copper foil companies such as Noord, Jiayuan Technology, Lingbao Huaxin, and Warwick Copper Foil, there are also many non-specialized companies involved in this business such as Garden Group, Smart Energy, Daren Group, and Erye Group.

With the influx of capital from new entrants, the release of new production capacity, the sudden drop in the price of lithium battery copper foil, and the replacement of new competitive products, the market for lithium battery copper foil is teeming with activity.

Due to the scarce supply of 6μm copper foil, the market was in deficit before 2019, and the product price and gross profit margin are still more impressive than for 8μm copper foil.

At present, the main market share of 6μm copper foil is concentrated in the hands of a few companies such as NORD, Jiayuan Technology, Lingbao Huaxin, and Warwick Copper Foil.

The sales price of lithium battery copper foil is mainly priced according to “copper price + manufacturing fee”. Previously, due to the strong downstream market demand and the tight supply, the manufacturing fees of lithium-ion copper foil continued to rise in 2016-2019, driving copper foil prices and gross profit to increase, and enhancing the profitability of copper foil enterprises.

However, entering 2020, the price of lithium battery copper foil has shown a significant downward trend. The main reason is that the release of new production capacity has intensified market competition and the impact of the epidemic has led to weak downstream demand.

Taking 6μm copper foil as an example, the manufacturing cost of 6μm copper foil in 2019 was about 50,000-56,000 yuan / ton, and the current processing fee has fallen below 50,000 yuan / ton.

Previously, the industry believed that there would be a 6μm copper foil supply gap in the power battery industry in 2020. However, under the influence of further subsidies and the impact of the epidemic, power battery companies are under pressure to reduce costs. Battery companies have slowed down the replacement and purchase of 6μm copper foil. Coupled with the new capacity added, the growth of demand for 6μm copper foil in the power market is limited this year.

The core technology of lithium battery copper foil is mainly reflected in the technical indicators of lithium battery copper foil thickness, mass per unit area, tensile strength and oxidation resistance.

The thinner the copper foil, the lower the yield, the lower the operating rate, and the higher the manufacturing cost.

As more and more companies make breakthroughs in 6μm copper foil technology and mass production, R & D and mass production of 4-4.5μm ultra-thin copper foil have become an inevitable for copper foil companies to remain competitive.

At present, many Chinese copper foil companies have announced that they have developed or mass-produced 4.5μm high-end copper foil, and competition in the 4.5μm market is coming.

“The 4.5μm copper foil developed by the company has been in mass production, and the monthly supply is expected to reach about 600 tons in the fourth quarter.” Chen Yubi said current shipment of 6μm copper foil accounts for more than 50% of sales while 4.5 μm copper foil will become the company’s next-generation product.

Warwick Copper Foil also said that the 4.5μm high-end copper foil developed by the company has entered the stage of mass production and supply, and the copper foil will become one of Warwick’s main products in the future. The company originally planned to deliver about 300 tons in March, but it was delayed due to the epidemic.

It is worth noting that although mainstream copper foil companies are laying out 4.5μm copper foil, and mainstream battery companies are also accelerating the introduction of 4.5μm copper foil, they are basically still in the testing stage.

Industry insiders believe that, based on the production cycles of copper foil companies and the manufacturing capacity of battery companies, it may take about 2 years for 4.5μm copper foil to be widely applied in the field of power batteries.

RR