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SMM June 23rd News: At today's online market live streaming conference hosted by SMM, SMM analyst Yu Shaoxue gave a live broadcast on the current development status and future prospects of lithium copper foil in China. In the live broadcast, the analyst introduced the current development status of the lithium battery copper foil industry, starting from the perspective of the lithium battery industry and combining with the data summary of research on lithium battery copper foil companies, then introduced the development trend of downstream application fields of lithium batteries, and finally predicted the future supply and demand of lithium battery copper foil based on downstream demand.

Analysis of the Current Situation of Lithium Battery Copper Foil Industry in China

Lithium copper foil is located at the upstream of the lithium battery industry chain, serving as a negative current collector. Together with positive electrode materials, negative electrode materials, separators, electrolytes, and other materials (such as conductive agents, packaging materials, etc.), it forms the battery cell of the lithium battery. The battery cell, BMS (also known as our battery management system), and accessories are packaged in packs to form a complete lithium battery pack, which is applied in downstream fields such as new energy vehicles.

Standard copper foil is an upstream material for making copper clad boards and printed circuit boards, and its important use is to serve as a wire for interconnecting electronic components. Applied to consumer electronics, computers, and related devices.

In 2020, China's lithium battery production was approximately 150000 tons, accounting for 31% of the total electronic copper foil production. The production of lithium battery copper foil in China has increased from 50000 tons in 2015 to 153000 tons in 2020, an increase of over 100000 tons, with a compound annual growth rate of 25.06%. From the perspective of product structure, the proportion of standard foil is still as high as 69%, showing a decreasing trend year by year, while the proportion of lithium copper foil is increasing year by year.

Among the important domestic lithium battery copper foil production companies in 2020, there were a total of 10 companies with an annual production capacity of over 2000 tons of lithium battery copper foil, with an increase rate of over 2 digits. The total production of lithium copper foil by Longdian Huaxin, Nord Group, and Guangdong Jiayuan is about 77000 tons, accounting for about 50% of the total domestic production.

Starting to import CATL in 2018 6 μ After m copper foil, 6 μ The proportion of m continues to rise, from around 14% in 2017 to 45% in 2021, and has developed into a mainstream specification in the industry. 4．5 μ M has been available for mass use since last year, with an average monthly usage of over 300 tons in the industry. Jiayuan Technology, Nord Group, Copper Crown Copper Foil and other companies have all achieved 4.5 μ Mass production of copper foil. According to SMM, Jiayuan's annual production of 4.5 microns is about 2000 tons, while Nord has more than 1000 tons. Downstream companies such as CATL and BYD are currently starting to mass produce 4.5 micron products.

The finished product price of copper foil is mainly composed of copper price+processing fee. The price of copper wire purchased by copper foil companies is generally based on the average price of Shanghai Nonferrous Network No.1 electrolytic copper+processing fee model, while the price of selling copper foil is mainly based on the monthly average price of spot goods last month+processing fee model. The determining factor of a company's operating gross profit is the difference in processing fees between the company and its suppliers, namely "sales processing fees - supplier processing fees". Essentially, changes in copper prices have a relatively small impact on the company's operating gross profit, and therefore have a relatively small impact on the net profit of the copper foil company. Based on this background, the profitability of the company's overall product processing fee level is the core key variable.

Firstly, lithium copper foil, as a carrier and conductor of negative electrode materials for lithium batteries, was driven by the first round of rapid development of new energy vehicles worldwide from 2016 to 2017, leading to an increase in processing costs. By 2017, the average processing cost of 8um lithium copper foil reached 50000 yuan/ton. However, as the downstream growth rate of lithium batteries slowed down in 2019 and the production of lithium copper foil expanded μ The processing cost of lithium copper foil has once again dropped to the level of 30000 yuan/ton. Since the second half of 2020, the increase in downstream demand has led to a shortage of lithium copper foil supply, and the processing cost of copper foil has significantly rebounded. As of 8 μ The processing cost of copper foil is about 36000 yuan/ton, 6 μ The additional fee for copper foil is 46000 yuan/ton, 4.5 μ The processing cost of copper foil is as high as around 75000 yuan/ton.

Development status of downstream lithium battery industry

The rapid development path of new energy vehicles

In 2020, the global sales of automobiles were over 80 million, while new energy vehicles were only over 3 million, compared to approximately 1.22 million in China. It is expected that the production of new energy vehicles will reach 6.1 million by 2025. Looking further, it is conservatively estimated that the sales volume in 2030 will reach 13.6 million. Looking at the rapidly increasing proportion of electrification in other countries, it is very difficult to predict this emerging industry. Once it reaches the critical point, it will increase at a base level speed.

The installed capacity of Carbon Peak and carbon neutrality will exceed 30GW at the end of the 14th Five Year Plan

As of the end of 2020, China's cumulative installed capacity of electrochemical energy storage ranked second, at 3.2GW, an increase of 83.3% year-on-year; Among various electrochemical energy storage, the maximum cumulative installed capacity of lithium battery is 3GW. The country has released the "Guiding Opinions on Accelerating the Development of New Energy Storage (Draft for Soliciting Opinions)", and plans to achieve a capacity of 30GW of energy storage by 2025. If the lithium-ion battery for energy storage is configured according to 2 hours, a 60 gigawatt battery is required. Assuming 900 tons of copper foil is used for one gigawatt battery, the demand for copper foil for optical energy storage is also very high. In addition to electric energy storage, there are also household energy storage, communication base stations, USB backup power supplies, etc. It is expected that by 2025, the shipment volume in the Chinese market may reach 60GWh, with a five-year compound growth rate of over 33%. The rapid increase in shipments of lithium batteries for energy storage is mainly due to the rapid decrease in the cost of lithium batteries driven by the large-scale production of power lithium batteries for new energy vehicles.

China's battery market - globally announced investment plans

In 2020, the cumulative installed capacity of lithium-ion batteries for new energy vehicles in China was 63.3 GWh, an increase of 1.8% year-on-year. From an overall performance perspective, due to the impact of the epidemic, the monthly installed capacity of power lithium batteries has been on a negative rise in the first half of the year, and it was not until the second half of the year that it was able to resume a rapid increase. From the perspective of installed capacity, CATL is the leading supplier of lithium-ion battery systems for power generation, while BYD's internal battery supply is the main source. Therefore, in terms of expansion scale, it is weaker than CATL. Based on the future planning and production increase of several major companies this year, SMM expects the demand for lithium batteries to be around 390 gigawatts for power lithium batteries, 150 gigawatts for 3C batteries, and up to 60 gigawatts for energy storage.

Analysis of the Development Trend of Lithium Battery Copper Foil Industry

In 2022, the newly built copper foil factories (or production lines) in China will add a total annual output of approximately 100000 tons. Among them, 85% is the new production of lithium battery copper foil.

It is expected that the production of electrolytic copper foil in China will continue to increase at a double-digit annual growth rate between 21 and 23 years. In 2022, the production of electronic circuit copper foil and lithium battery copper foil will reverse compared to the first year, with lithium battery copper foil producing more than electronic circuit copper foil.

Currently, excess production is mainly concentrated in 6 μ Lithium copper foil of m and above, but the demand side is towards 6 μ Transition of m and below. six μ The decrease in orders for lithium battery copper foil above m in the market has sparked fierce market competition, making it difficult for some companies to effectively release new production; ③ Lithium copper foil 8 μ M direction 6 μ M switching has a technical threshold and requires a long time cycle. It is expected that the production utilization rate of manufacturers with ultra-thin lithium copper foil at the head will be high. Due to technical reasons, small manufacturers are unable to meet the production requirements of ultra-thin lithium copper foil, but μ The demand space above m will further decrease. In this situation, it is expected that the overall production utilization rate of lithium battery copper foil manufacturers will remain low, and the top manufacturers will operate at full capacity.

Currently, the copper foil for lithium batteries is 8% μ M and 6 μ The future development trend is to develop towards thinner and higher energy density products, with an average of 0.90KG/Kwh -0.70KG/Kwh calculated as a decreasing trend. However, considering the overall increase in production of lithium copper foil, the overall industry utilization rate of around 65%, and the yield rate, the global supply and demand relationship for lithium copper foil will be relatively healthy. According to market economic laws, future expansion plans for lithium copper foil production will still be planned based on overall market demand. But in the short term, high-end 6 μ Lithium battery copper foil production of m and below is relatively scarce.

SMM expects the demand for lithium copper foil to reach 540900 tons by 2025. 20. In the 21st and 23rd years, the nominal production was higher than the demand for lithium copper foil, and the production was surplus in all three years. It is expected that the overcapacity rate will begin to narrow from 2023, and the entire market will tend to be tight and balanced by 25 years.

From the perspective of the supply and demand relationship between lithium battery copper foil and electronic circuit copper foil, in 2020, due to the impact of the epidemic, supply and demand mismatch occurred, and copper foil processing costs entered an upward trend. In a short period of time, due to delayed production realization and 6 μ It is difficult to convert the production of ultra-thin copper foil below m, and the processing cost of copper foil still maintains an upward trend.

Overall, the nominal production of copper foil in China is in a surplus state. With the production of new production and the improvement of production utilization rate, the future processing cost is expected to be reduced. It is expected that the processing cost for 6 microns will be 40000/ton and the processing cost for 8 microns will be 30000/ton by the year 25.

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