Industry observation | Lithium copper foil "full order": domestic giants have expanded their capacity one after another and will still be in short supply in 2021.

Under the huge market expectation, the secondary market lithium electricity plate ushered in the "carnival", the lithium electricity industry dividend is also gradually realized. Lithium copper foil, the giant Nord shares (600110.SH) bluntly said that "full order." Under the "price and market", the market expansion is greatly restricted, and the market generally believes that the relationship between supply and demand of lithium copper foil in 2021 is tight.

Financial Associated Press reporters learned that downstream demand-driven and rising prices of raw materials, 6 μ m lithium copper foil is currently showing a high shock. Trapped by the long production cycle of key equipment, process accumulation and qualification barriers and other reasons, capacity will be difficult to break through in a short period of time.

Li Pengcheng, vice president and secretary of Nord shares, told the Financial Associated Press that the company is currently full of orders for lithium copper foil, which is far greater than the factory's output. In terms of share price, Nord shares have risen nearly 46% since the beginning of December.

Tight supply and demand or failure to increase profit margins

Lithium copper foil is used as a current collector for the anode material of lithium battery. according to Anxin's new calculation, it accounts for 5% of the battery cost in the 8% range. The cost of lithium copper foil is mainly composed of raw materials and processing fees, of which direct materials account for more than 70 per cent, according to the prospectus of 688388.SH.

Hu Junlong, an analyst at Xin spinulosa, told the Financial Associated Press that the current rise in copper foil prices mainly follows the fluctuation of copper prices. In view of the relatively strong battery factories, judging from the price increase, although the supply is tight, it has not actually risen significantly to the part of processing fees. This may mean that the lithium copper foil factory is in the awkward situation of "not applauding", and its profit margin may not be significantly improved.

There are also Chaohua Technology (002288 SZ) relevant sources told the financial news agency that copper foil processing fees have increased by 30%, downstream demand explosive growth, but insufficient supply, imbalance between supply and demand has also led to a rise in product prices. However, Chaohua Technology and Nord shares did not disclose the situation related to profit margins.

The tight supply of lithium copper foil mainly comes from two reasons. Li Pengcheng explained that at present, the demand side continues to improve, and the customer demand for lithium batteries downstream is growing exponentially, including the rapid growth of power batteries and high-end consumer batteries; while the production capacity of the supply side is limited, the capacity release rate of domestic lithium copper foil in the past two years can not keep up with the expansion rate of customers.

Chaohua technology-related sources analyzed the demand side of the financial news agency that downstream battery manufacturers have expanded production on a large scale, such as LG2023 annual planning capacity to 300GWhh, 2025 Ningde era production capacity will be expanded to 450GWh.South Korea SKI plans to expand production capacity to 100GWhWH 1Gwh requires lithium electricity 6 micron copper foil 700 tons, 8 micron needs 900 tons, lithium copper foil demand ushered in explosive growth opportunities.

According to CCFA data, it is estimated that the global demand for 6 μ m lithium copper foil will grow at an average annual compound growth rate of 68.5% from 2020 to 2025, and the corresponding market space will have an average annual compound growth rate of 64.9%, which is significantly higher than the overall growth rate of lithium copper foil.

As for the driving force of pulling lithium copper foil in the future, Li Pengcheng believes that the downstream applications of pulling lithium copper foil in the future are mainly concentrated in power batteries, energy storage batteries, high-end 3C consumer batteries, etc., with more and more application scenarios of lithium batteries, the application scale of lithium copper foil will also become larger and larger.

A reporter from the Financial Associated Press noted that since July 2020, domestic new energy vehicles have achieved positive growth for the first time this year compared with the same period last year, and then improved month by month. In addition, Hongguang MINI, a national god car, has "won a complete victory" in the market and Model Y has cut prices sharply a few days ago, which may further disrupt the new energy vehicle market and promote the popularity of new energy vehicles to a certain extent in full competition.

There are many factors that limit production capacity expansion.

Many reporters of the Financial Associated Press have learned that the relationship between supply and demand of lithium copper foil in 2021 is generally tight. However, the domestic lithium giants have increased their codes one after another, but due to a certain cycle of production expansion, they may not be fully released in 2021.

Incomplete statistics, last year's domestic A-share lithium copper foil factory capacity expansion shows that in May last year, Nord shares planned to put an annual production capacity of 15000 tons of extremely thin copper foil project, in December Jiayuan Technology (688388 SH) under construction or in the planning stage production capacity of 35000 tons, in October, Chaohua Technology plans to put into annual production of 10, 000 tons of high-precision ultra-thin lithium copper foil.

However, the accumulation of core equipment and technology has also become a key factor affecting market capacity expansion. According to Li Pengcheng's analysis, high-end production equipment is monopolized by Japan, and the level of domestic alternative equipment is gradually catching up, but the production capacity is limited. The new copper foil enterprises EIA and customer certification also need a long time, and the industry experts who master the technology are relatively scarce.

In order to improve the energy density of the battery, the development of copper foil is light and thin, the common process in the industry is electrolytic copper foil, which has four steps: dissolving copper, raw foil, post-treatment and slitting. Among them, the raw foil needs to use the cathode roller, and now the cathode roller used in the high-end copper foil basically comes from Japan.

Chaohua technology sources said that the purchase of cathode rollers from placing an order to receiving the goods has been extended to 2.5-3 years. To some extent, it also limits the release of industry capacity and raises industry barriers.

According to its forecast, the tight supply situation will be maintained in the future. In 2019, the output of electrolytic copper foil is 431000 tons, the sales volume is 420000 tons, the import volume is 104500 tons, and the export volume is 26900 tons. It is expected that there is still a large gap. In addition, the rapid development in the field of energy storage will also be an important growth engine to drive the demand for lithium copper foil.

The Bank of China Securities Research report shows that the technical barrier of 6 μ m extremely thin copper foil is higher, and the production capacity is concentrated in China. It is estimated that the effective production capacity of 6 μ m copper foil in China from 2020 to 2022 is 52000 tons, 69000 tons and 90, 000 tons respectively. The gap between supply and demand is-25000 tons,-6200 tons and 16300 tons respectively, and the supply and demand pattern is expected to be significantly improved.

However, it is worth noting that domestic lithium copper foil manufacturers have developed to 4 and 5 μ m. Nuode ultra-thin copper foil 4.5 μ m-5 μ m has been mass produced and supplied. Jiayuan Technology also said in the 2020 semi-annual report that it has successfully developed and produced very thin lithium copper foil less than 6 microns in small batches. However, Hu Junlong also said that ≤ 6 micron lithium copper foil is too thin and easy to break, downstream to be debugged, not yet large-scale application.