Another price rise in the copper foil market Q1 performance of related enterprises has greatly increased industry insiders: supply exceeds demand in the next two to three years

Recently, the copper foil market has once again ushered in a price boom. The average price of copper foil has risen by about 22% compared with the beginning of the year, and the price of electronic copper foil has risen even more ferociously, rising 60% since its low in 2020.

Since the second half of last year, benefiting from the rapid development of electronics, new energy vehicles and 5G industry, the copper foil industry has entered a period of high growth, products are in short supply, and the tight relationship between supply and demand has led to a continuous rise in copper foil prices. Affected by this, including Tongling Nonferrous (000630 SZ), including the production of copper foil companies, this year's quarterly results ushered in a sharp rise. Related companies have begun to expand the production capacity of copper foil. In this regard, some industry insiders told the Financial Associated Press that the production expansion cycle of copper foil is relatively long, and the realization of full production is generally about two to three years, so supply in short supply will become a daily event in the next two or three years, so the relevant enterprise performance involved will also be worthy of market expectations.

Enterprise Q1 performance report

The copper foil industry has entered a period of high growth, and the performance of listed companies in the industrial chain in the first quarter is also very eye-catching.

Jiayuan Technology (688388 heroin SH) achieved record results in the first quarter of 2021. On April 16, Jiayuan Technology released a first-quarter report showing that during the reporting period, revenue reached 530 million yuan, an increase of 259 percent over the same period last year, and net profit of 111 million yuan, an increase of 366 percent over the same period last year, deducting 106 million yuan of non-net profit, an increase of 646 percent over the same period last year.

On April 30, Chaohua Technology (002288 SZ) released its first-quarter results of 2021, showing operating income of 539 million yuan in the first quarter of the reporting period, an increase of 153.74% over the same period last year, and a net profit of 33.4917 million yuan belonging to shareholders, an increase of 211.68% over the same period last year. Previously, Chaohua Technology 2020 annual report data show that since the third quarter of last year, the company's performance turned into profits, of which the fourth quarter net profit reached a single-quarter high of 45.59 million yuan.

In this regard, Chaohua Technology said that benefiting from the rapid development of 5G, new energy vehicles, IDC, automotive electronics, consumer electronics and other fields, the demand for copper foil and copper clad laminate is strong, especially the continuous rise in copper foil processing fees has led to a substantial increase in revenue, gross profit margin and net profit.

According to its first-quarter results released on April 27th, revenue in the first quarter of 2021 was about 889 million yuan, up 155.46% from the same period last year, while net profit was about 65.4 million yuan, up 803.30% from the same period last year.

As the largest copper processing company in Anhui, Tongling Nonferrous (000630recoverySZ) achieved a nearly six-fold increase in net profit in the first quarter of 2021 compared with the same period last year. According to the disclosed quarterly report for 2021, during the reporting period, the company achieved revenue of 30.245 billion yuan, an increase of 58.11% over the same period last year, and net profit of 383 million yuan, an increase of 562.64% over the same period last year.

For the growth of performance, Tongling Nonferrous related official told the Financial Associated Press that there is a large demand for market orders, and the price of copper products has also increased greatly, especially the sharp rise in copper foil processing fees, which has promoted the growth of the company's performance.

The price of copper foil has risen sharply.

Behind the performance growth is the continuous rise in copper foil prices, according to the Financial Associated Press reporter, copper foil prices are usually composed of copper prices and processing fees. According to industry data, the current processing fee for copper foil is nearly 50% higher than the lowest point in 2020. At present, the processing fee for 8 μ m copper foil is about 30, 000 yuan / ton, 6 μ m copper foil processing fee is 45000 yuan / ton, and 4.5 μ m copper foil processing fee is up to 70, 000 yuan to 75000 yuan / ton. The processing fee for some models of electronic copper foil has increased by 100% compared with June last year.

In this regard, Chaohua technology-related sources also told the Financial Associated Press that the company's current copper foil orders are sufficient, and since the second half of 2020, copper foil processing fees have increased by about 30% to 40%.

In addition, during the May Day holiday, the price of copper in London peaked at $10000, within walking distance of the 2011 high of $10190. The main 2106 contract of Shanghai Copper opened high on May 6, closing at 73240 yuan per ton, a new high in nearly a decade, while by the close of trading on May 7, the intraday high of Shanghai copper was the highest since March 2011, with an intraday high of 74950 yuan / ton and a close of 74900 yuan / ton.

Some industry analysts said that in the case of tight supply and good demand, copper prices may usher in a new round of bull market. Among them, Goldman Sachs, CITI Bank and other major international investment banks also raised their expectations of copper prices again, and Goldman Sachs expects copper prices to hit $11000 per tonne within six months.

It is worth noting that with the rapid development of downstream new energy vehicles, 5G communications and other industries, the demand for upstream lithium raw materials will continue to increase. According to data from the Ministry of Commerce, in 2020, the production and sales of new energy vehicles in China reached a record high of 1.366 million and 1.367 million respectively, and the new energy vehicle market is expected to continue to develop this year. Therefore, the demand for copper foil will continue to grow. Industry insiders predict that the total global demand for lithium batteries will reach 888GWH by 2025, and the total demand for lithium copper foil will be 755000 tons. There will be three times the growth space for lithium copper foil in the next five years.

The above-mentioned Tongling non-ferrous related person told the Financial Associated Press that the company's copper foil orders have been fully arranged in the first half of the year, and according to the current demand of downstream enterprises, this year's orders will be in short supply.

In this regard, industry analyst Wu Hao told the Financial Associated Press that the market demand is large, copper foil prices will run at a high level this year, and will continue to show a rising trend.

Capacity expansion of many enterprises

Prices remain high, and there is a continuing upward trend, which also makes many enterprises begin to increase horsepower to expand production.

Among them, Jiayuan Technology plans to build 15000 tons / year and 20, 000 tons / year lithium copper foil projects in Ningde and Ganzhou respectively in October and November 2020, and build 16000 tons / year production capacity in Meizhou in March 2021.

In addition, according to Jiayuan Technology, the company currently has a copper foil production capacity of 16000 tons per year, which is under construction or in the planning stage. including 5000 tons / year new energy power battery high-performance copper foil technology transformation project, annual production capacity of 15000 tons of high-performance copper foil project and so on.

At the same time, Norde's Qinghai Node II 15000-ton project has started in 2020, and plans to build 68000 tons of high-end ultra-thin lithium copper foil production capacity in Huizhou, Fujian and Nanjing.

Chaohua Technology previously disclosed the refinancing plan to raise no more than 1.8 billion yuan to invest in the construction of a high-precision ultra-thin lithium copper foil project with an annual production capacity of 10, 000 tons.

It is reported that Chaohua Technology has a total production capacity of 20,000 tons of copper foil in 2020, and the company will continue to expand its production capacity this year. At present, the company has 4.5 μ m lithium copper foil production capacity and 6 μ m lithium copper foil production capacity.

According to the latest statistics of the Copper foil Branch of China Electronic Materials Industry Association, there will be 11 copper foil enterprises in China with a total new production capacity of 107500 tons in 2021, of which 100500 tons are lithium copper foil. There will be 100500 tons of new copper foil production capacity in 2022, 85 per cent of which will be lithium copper foil.

In this regard, Wu Hao told the Financial Associated Press that the expansion of downstream demand has given the market a lot of room, so it is an inevitable trend for enterprises to expand the production capacity of copper foil. It is expected that the competition for production expansion of major enterprises will continue. "it will take more than two years for the production capacity of these enterprises to be released, so before these production capacity is released, the market will continue to be in short supply. After the release of production capacity, that is, two years later, the supply and price of copper foil will be controlled, before the price rise will not change. "