SHANGHAI, Feb 25 (SMM) – As an important anode material for lithium batteries, copper foil is in short supply due to the continuously booming new energy industry, and the conversion margins are at a high level. Many well-known domestic companies have begun to deploy in the copper foil industry.
In 2021, 6 companies announced the establishment of new copper foil production lines, and 8 new companies entered the copper foil industry, including Hailiang Co. and Hengtong Group. The total production capacity of the 14 companies was about 1.19 million mt, in which the capacity of lithium battery copper foil stood at about 1.02 million mt, accounting for 86% of the total capacity. The new PCB copper foil capacity was about 165,000 mt, accounting for only 14% of the total project production capacity. Under optimistic expectations, 4 companies are expected to put their capacity into production in 2022, including the capacity of 90,000 mt of lithium battery copper foil and 10,000 mt of PCB copper foil.
In 2022, the total operating production capacity of China’s copper foil industry will reach 267,000 mt, including 212,000 mt of lithium battery copper foil capacity and only 55,000 mt of PCB copper foil capacity. The pattern of China's copper foil industry will also change in 2022. SMM predicts that by 2022, the domestic production capacity of lithium battery copper foil will reach 582,800 mt, and the PCB copper foil capacity will be 446,300 mt. For the first time, the production capacity of lithium battery copper foil will surpass that of PCB copper foil, accounting for 57% of the total capacity. And by the end of 2022, there will be many large-sized copper foil enterprises with an annual output of 100,000 mt of copper foil, and a number of characteristic production bases in Huizhou in Guangdong, Lanzhou in Gansu, Yulin in Guangxi, and Tongling in Anhui will be formed.
In H1 2022, the increase in new copper foil production capacity will not be significant, and the conversion margins of lithium battery copper foil will remain high and volatile. In the second half of the year, the tight supply will ease as the new capacities are gradually put into production, and the conversion margins of lithium battery copper foil are expected to drop slightly by the end of the year. The conversion margins for the goods under long-term orders (including the orders scheduled in January-March) may drop below 40,000 yuan/mt, and the conversion margins for small orders may return to 40,000-43,000 yuan/mt. The prices of PCB copper foil are expected to stand stable in Q1 2022 after dropped in H2 2021. The downstream consumption remains sluggish, but some enterprises will replace their PCB capacities, which may slightly alleviate the oversupply situation in the market. The orders from the new energy vehicles and 5G markets after Q2 2022 are worth attention. SMM expects that the conversion margins of ordinary HTE copper foil will continue to drop, while that of high frequency and high speed copper still have upward room.
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