[hot spot observation] the price of copper foil is in short supply. Enterprises are busy expanding production under dividends.

Benefiting from the continued popularity of new energy vehicles, chip market and 5G base stations, the supply of lithium copper foil products exceeds demand and the price of copper foil continues to rise. In addition, copper foil prices are usually composed of copper prices and processing fees, both of which have been on an upward trend since the second half of 2020, which has also become a driving factor for the rise in copper foil prices.

The price of 6 μ m copper foil has risen by at least 5% since December 4, according to the China Chemical and physical Power Industry Association. The price of 8 μ m copper foil has risen by at least 9%. The prices of copper foil 6 μ m and copper foil 8 μ m, which are the main materials of lithium battery, are 104-106000 yuan / ton and 88-90 thousand yuan / ton respectively on January 22nd.

Corresponding to the price of copper foil, the operating rate of copper plate, strip and foil also continues to rise. According to SMM data, the monthly operating rate of SMM China's copper sheet, strip and foil has continued to rise since August, reaching the highest level since 2014. The operating rate of copper plate, strip and foil increased slightly month-on-month in December, basically the same as in November, and maintained a high growth rate compared with the same period last year. The start-up situation of plate, strip and foil enterprises was significantly better than that of the same period last year, and some research enterprises continued to maintain full production. However, compared with November, the future began to show a weak mood.

Monthly operating rate of SMM China Copper sheet, Strip and foil (%)

Application and classification of copper foil

Copper foil is a kind of negative electrolytic material, which is a thin, continuous metal foil deposited on the base layer of the circuit board. It acts as a conductor of PCB. It is easy to stick to the insulating layer, accept the printed protective layer, and form a circuit pattern after corrosion. According to relevant data, copper foil has the characteristics of low surface oxygen, can be attached to a variety of different substrates, such as metal, insulating materials, etc., and has a wide temperature range. Mainly used in electromagnetic shielding and antistatic, conductive copper foil on the substrate, combined with metal substrate, has excellent conductivity, and provides electromagnetic shielding effect.

Classification:

1. According to the process, it can be divided into electrolytic copper foil and Calendering copper foil. Because of its cost, process and other advantages, electrolysis has become the mainstream process of copper foil production at home and abroad. The vast majority of domestic copper foil production enterprises also use electrolysis. In 2017, the domestic output of electrolytic copper foil accounted for 98%.

2. According to the classification of downstream applications, electrolytic copper foil is mainly divided into electronic circuit copper foil and lithium copper foil, the former is used for PCB and copper clad laminate, and the latter is used as lithium cathode carrier.

3. According to the thickness, it can be divided into very thin copper foil (≤ 6 μ m), ultra-thin copper foil (6-12 μ m), thin copper foil (12-18 μ m), conventional copper foil (18-70 μ m) and thick copper foil (> 70 μ m).

The demand for copper foil is boosted by the popularity of the end market.

With the rapid development of new energy and electronics industry, the output of China's electrolytic copper foil industry is also developing rapidly. China's electrolytic copper foil production in 2019 increased by 9.0% to 430600 tons compared with 395200 tons in 2018, according to data from the Electronic Copper foil Branch of the China Electric Power Association. The copper foil production capacity of China's electronic circuits will increase by 33500 tons to 335000 tons in 2019 compared with 2018. It is estimated that in 2020, China's new production capacity of copper foil for electronic circuits will reach 44000 tons, and the production capacity will reach 379000 tons.

New energy vehicle market:

In recent years, the demand for large battery capacity of new energy vehicles has also increased the demand for lithium copper foil. According to China Automotive Statistics, despite the gloomy moment brought about by the novel coronavirus epidemic, the production and sales of new energy vehicles completed 1.366 million and 1.367 million respectively in 2020, up 7.5 per cent and 10.9 per cent respectively over the same period last year. Among them, in December, the production and sales of new energy vehicles reached monthly highs of 235000 and 248000 respectively, up 55.7% and 49.5% year-on-year. In terms of power batteries, power battery production totaled 83.4 GWH in 2020, down 2.3% from the same period last year, but in December, China's power battery output totaled 15.1 GWH, an increase of 143.9% over the same period last year and 18.9% month-on-month growth. New energy vehicle production and sales data continue to shine, Ningde era and other power battery companies have begun to expand production plans, greatly improve the level of battery capacity, and further increase the demand of the lithium copper foil market.

Electronic Market:

Due to the upgrading demand for the electronics market in the 5G era, which in turn drives the demand for PCB, the global electrolytic copper foil market is estimated to be about $8 billion by the end of 2018, but the size of the electrolytic copper foil may grow to $11.2 billion by 2023 and to $17.5 billion by 2026, with an annual compound growth rate of 10.39%.

Throughout the 5G base station market, about 580000 new 5G base stations have been added in 2020, and a total of 718000 5G base stations have been built. Recently, the relevant person in charge of the Ministry of Industry and Information Technology said that the overall situation of China's industrial development in 2021 is good, and the opportunities outweigh the challenges. The construction of 5G network will continue to be deepened in 2021, and 600000 new 5G base stations are planned to enhance the basic capacity of the industry.

In terms of the chip market, according to statistics released by the National Bureau of Statistics in December 2020, the output of integrated circuits in December was 27.6 billion, an increase of 20.8% over the same period last year. Total output from January to December was 261.3 billion, an increase of 16.2% over the same period last year.

The production capacity of copper foil expands slowly and the supply exceeds the demand.

From the supply side, the capacity expansion of copper foil enterprises is slow. According to the Soochow Securities Research report, the tight situation of supply and demand in the medium-term copper foil market will last for a long time, and there are many plans for domestic copper foil enterprises to expand production in the future, but from the progress tracked in 2020, the actual production expansion is lower than expected. except for the 8000-ton Chaohua science and technology project, which was put into production in November 2020, the progress of other projects is slow. The main reasons for the slow progress are the long ordering cycle of copper foil equipment and the capacity constraints of equipment manufacturers, and it is expected that the supply and demand pattern of the industry in 2021 will be better than expected. The total production capacity of copper foil in China is more than 500000 tons, and it is estimated that the production capacity expansion in 2020 will be 33 million tons in 2021, with a certain increase but still controllable.

Raw materials: copper prices soar

Since March 2020, copper prices have continued to be strong. As of January 28, 2021, the average price of electrolytic copper in SMM Bay was 57945 yuan / ton, an increase of 58%. The sharp rise in the price of raw materials has pushed up the price of copper foil.

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Copper foil processing fees soar

Yan Zhigang, a researcher at the Power Battery Application Branch of the China Chemical and physical Power Industry Association, said that the current copper foil processing fee has risen nearly 30% from the lowest point in 2020. At present, the processing fee of 8 μ m copper foil is about 30, 000 yuan / ton, that of 6 μ m copper foil is 45000 yuan / ton, and that of 4.5 μ m copper foil is 70, 000 yuan / ton to 75000 yuan / ton. At present, although the processing fee of 6 μ m copper foil in the mainstream market has rebounded from the first half of 2020, it still has a big gap compared with the high level of 60, 000 yuan / ton to 65000 yuan / ton in 2017.

On January 18, Chaohua Technology said that the company currently has sufficient copper foil orders and high capacity utilization. Copper foil processing fees have been on an upward trend since the second half of 2020, and the company's copper foil processing fees have increased by about 30% and 40% since the second half of 2020. Chaohua Technology also said that Chaohua Technology, as a potential leading enterprise of copper foil in the layout of the whole industry chain, benefits from the market supply and demand pattern of electronic copper foil and lithium copper foil, and the processing fee of superimposed copper foil continues to rise. the high growth of short-term performance has strong certainty and sustainability.

The copper foil market benefits from good enterprises and is busy expanding production.

There are not many domestic manufacturers and production capacity of 6 μ m copper foil, which are mainly concentrated in a small number of manufacturers, such as Nord shares, Jiayuan Technology, Chaohua Technology and so on. In addition, Longdian Huaxin, copper crown copper foil, Telford science and technology, Zhongyi science and technology, Huawei copper foil and other enterprises also began to increase.

Copper foil market continues to improve, industrial chain enterprises have benefited, a number of related companies have expanded production.

Recently, Nord AG announced that the company's Sun company Huizhou Electronics plans to expand its annual production capacity of 12000 tons of high-end very thin lithium copper foil.

At the beginning of December 2020, copper crown copper foil submitted an application for listing, with a proposal to raise 1.2 billion yuan for the annual production of 20, 000 tons of ultra-thin electronic copper foil for high-precision energy storage (phase II), high-performance electronic copper foil technology center project and supplementary liquidity. At present, copper crown copper foil has a total production capacity of 45000 tons / year, of which lithium copper foil has a production capacity of 20, 000 tons / year.

In November 2020, Jiayuan Technology also announced the construction of a project with an annual production capacity of 20,000 tons of electrolytic copper foil in Ganzhou, Jiangxi Province. At present, Jiayuan Technology is under construction or in the planning stage of lithium copper foil production capacity of 35000 tons, after full completion will have a capacity of 51000 tons.

In November 2020, Longdian Huaxin announced that it would invest 10 billion yuan in stages to build Longdian Huaxin Lithium Copper foil East China headquarters base in Nanjing Lishui Industrial New City. At present, Longdian Huaxin also has capacity layout in Henan Lingbao, Shaanxi Baoji, Shandong Dongying and other places.

In mid-November 2020, the application document of Hubei No.1 Science and Technology to be listed on the gem was accepted. According to the prospectus submitted by the company, the company plans to raise 716 million yuan for the production and construction of 10, 000 tons of high-performance electronic copper foil, the construction of a technology research and development center and supplementary liquidity.

In October 2020, Chaohua Technology disclosed its financing plan to raise no more than 1.8 billion yuan to invest in projects with an annual output of 10, 000 tons of high-precision ultra-thin lithium copper foil and 6 million high-end cores. It is reported that the total copper foil production capacity of Chaohua Technology has reached 20,000 tons.

Although domestic lithium copper foil enterprises are increasing their production capacity, the production cycle of lithium copper foil is generally as long as 2-3 years, and factors such as core equipment and process accumulation are still the main factors leading to slow capacity release. in the short term, the demand gap of high-end lithium copper foil is expected to be difficult to make up. Market participants believe that the new capacity of copper foil will be gradually released in 2022, the industry or welcome the new competition pattern. At present, copper foil enterprises with the advantages of technology accumulation and innovation in the industry can rely on stable supply relations to strengthen their advantages and enjoy the technical dividend of product iteration.